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Navient (NAVI)
NASDAQ:NAVI
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Navient
(NASDAQ:NAVI)
55Neutral
Positive Factors
Risk Management
The prepayment risk in the FFELP portfolio has diminished significantly, providing a favorable risk-reward setup.
Share Upgrade
Navient Corp. shares have been upgraded from Neutral to Buy based on a sum-of-the-parts analysis.
Strategic Actions
Phase 1 of strategic actions already in motion, cutting ~$120M/yr of shared/corp. costs from the expense base, accelerating buybacks to $65M in 4Q.
Negative Factors
Earnings Guidance
Initial guidance for 2025 was below consensus expectations for EPS, primarily driven by lower net interest margin.
Expansion Challenges
Private loan origination growth target for 2025 is weaker than estimated, indicating challenges in expansion.
Financial Performance
Navient reported adjusted EPS significantly below consensus, driven by lower net interest income, higher provision expenses, and higher operating expenses.
Navient (NAVI) vs. S&P 500 (SPY)
Market Cap
$1.34B
Dividend Yield4.88%
Average Volume (3M)746.95K
Price to Earnings (P/E)11.4
Beta (1Y)1.07
Revenue Growth-14.40%
EPS Growth-34.34%
CountryUS
Employees2,100
SectorFinancial
Sector Strength84
IndustryFinancial - Credit Services
Share Statistics
EPS (TTM)1.17
Shares Outstanding102,276,306
10 Day Avg. Volume884,400
30 Day Avg. Volume746,950
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.18
Price to Cash Flow (P/CF)42.60
P/FCF Ratio0.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$14.29Price Target Upside8.75% Upside
Rating ConsensusHold
Number of Analyst Covering7
Navient Business Overview & Revenue Model
Company DescriptionNavient Corporation (NAVI) is a leading provider of education loan management and business processing solutions. The company operates primarily in two sectors: education loan servicing and asset recovery. Navient's core services include managing student loans for millions of borrowers and providing business processing services to government clients, including federal, state, and local agencies.
How the Company Makes MoneyNavient makes money through several key revenue streams. Primarily, it generates revenue from servicing student loans, which includes collecting payments, managing accounts, and providing customer service for both federal and private education loans. Additionally, Navient earns revenue from asset recovery services, which involves the collection of overdue payments on defaulted student loans and other receivables. The company also benefits from its business processing solutions, offering services to various government and healthcare clients. Significant factors contributing to Navient's earnings include its contractual agreements with the U.S. Department of Education and its partnerships with financial institutions for private loan servicing.
Navient Financial Statement Overview
Summary
Navient's financial performance shows a mixed picture. Strong gross profit margins and operational efficiency are offset by inconsistent revenue growth and low net profit margins. High leverage and low equity ratios indicate financial risks, while cash flow generation remains strong but inconsistent.Income Statement
Navient's income statement reveals moderate challenges. The gross profit margin for 2024 was approximately 91.7%, indicating strong profitability before operating expenses. However, the net profit margin significantly declined to 3.44%, suggesting that higher operating or non-operating expenses impacted profitability. Revenue growth has been inconsistent, with substantial fluctuations observed over the years, including a decrease from 2023 to 2024, indicating potential instability in revenue streams. EBIT and EBITDA margins remained robust at around 73.9% for 2024, reflecting effective operational management despite revenue volatility.45
Neutral
Balance Sheet
The balance sheet reflects high leverage, with a debt-to-equity ratio of approximately 1.94 in 2024, indicating potential financial risk due to reliance on debt financing. The equity ratio stood at around 5.1%, showing limited equity financing compared to total assets. Return on equity was relatively low at 4.96% for 2024, pointing to inefficient equity utilization. These metrics suggest challenges in financial stability and potential vulnerability to interest rate fluctuations.35
Negative
Cash Flow
Navient's cash flow statement shows a mixed performance. Operating cash flow to net income ratio was approximately 3.50 in 2024, indicating strong cash generation relative to net income. However, free cash flow growth has been inconsistent, and free cash flow to net income ratio was approximately 3.50, reflecting reliance on operational efficiency for cash generation. The company has managed to maintain positive operating cash flow, but fluctuating free cash flow suggests potential challenges in maintaining cash reserves.50
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 3.81B | 1.28B | 1.74B | 2.21B | 1.69B | Gross Profit |
| 3.49B | 4.40B | 1.18B | 1.00B | 724.00M | EBIT |
| 2.81B | 346.00M | 2.93B | 936.00M | 532.00M | EBITDA |
| 2.81B | 3.95B | 2.93B | 2.66B | 0.00 | Net Income Common Stockholders |
| 131.00M | 228.00M | 645.00M | 717.00M | 412.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 2.10B | 839.00M | 1.53B | 905.00M | 1.18B | Total Assets |
| 51.79B | 61.38B | 70.80B | 80.61B | 87.41B | Total Debt |
| 5.13B | 57.30B | 66.90B | 76.98B | 83.94B | Net Debt |
| 3.03B | 56.46B | 65.36B | 76.07B | 82.76B | Total Liabilities |
| 49.15B | 58.62B | 67.82B | 78.00B | 84.97B | Stockholders Equity |
| 2.64B | 2.76B | 2.98B | 2.60B | 2.43B |
| Cash Flow | Free Cash Flow | |||
| 459.00M | 676.00M | 305.00M | 702.00M | 987.00M | Operating Cash Flow |
| 459.00M | 676.00M | 305.00M | 702.00M | 987.00M | Investing Cash Flow |
| 8.47B | 7.36B | 10.59B | 6.67B | 6.45B | Financing Cash Flow |
| -9.62B | -10.05B | -9.66B | -7.33B | -7.68B |
Navient Technical Analysis
Negative
13.14
Price Trends
13.66
Negative
13.95
Negative
14.39
Negative
Market Momentum
-0.13
Positive
43.43
Neutral
34.29
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NAVI, the sentiment is Negative. The current price of 13.14 is below the 20-day moving average (MA) of 13.48, below the 50-day MA of 13.66, and below the 200-day MA of 14.39, indicating a bearish trend. The MACD of -0.13 indicates Positive momentum. The RSI at 43.43 is Neutral, neither overbought nor oversold. The STOCH value of 34.29 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NAVI.
Navient Risk Analysis
Navient disclosed 32 risk factors in its most recent earnings report. Navient reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Navient Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $6.32B | 11.20 | 30.11% | 1.53% | 4.90% | 11.33% | |
72 Outperform | $11.50B | 21.05 | 6.63% | 3.21% | 3.41% | -12.41% | |
67 Neutral | $68.57B | 15.74 | 7.86% | 1.31% | 9.06% | -3.02% | |
64 Neutral | $14.85B | 34.21 | 8.26% | ― | 29.33% | ― | |
64 Neutral | $14.59B | 10.31 | 8.70% | 4.21% | 16.52% | -11.97% | |
55 Neutral | $1.34B | 11.38 | 4.85% | 4.88% | -14.40% | -34.34% | |
53 Neutral | $1.30B | 25.15 | 3.96% | ― | 3.63% | 27.77% |
* Financial Sector Average
Performance Comparison
NAVI
Navient
13.14
-3.35
-20.32%
COF
Capital One Financial
179.83
37.46
26.31%
SLM
SLM
29.93
8.75
41.31%
ALLY
Ally Financial
36.78
-1.83
-4.74%
LC
LendingClub
11.22
2.54
29.26%
SOFI
SoFi Technologies
13.07
5.71
77.58%
Navient Earnings Call Summary
Earnings Call Date: Jan 29, 2025 | % Change Since: -9.88% | Next Earnings Date: Apr 29, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a company in transition, achieving significant strategic milestones and cost reductions while facing challenges such as losses in core earnings, increased delinquencies, and restructuring costs. While the highlights demonstrate strong strategic execution and growth in consumer lending, the lowlights highlight ongoing financial and operational challenges.Highlights
Achievement of Strategic Goals
Navient successfully met its ambitious goal of finalizing several key transactions during 2024 on an aggressive timeline, including the divestment of government services and the sale of its healthcare business.
Strong Consumer Lending Growth
Consumer Lending business generated strong loan origination growth during 2024 with refinance volume growth exceeding $1 billion, 60% higher than the prior year, and in-school volume growing 13%.
Cost Reduction Success
Navient achieved significant cost reductions, yielding $120 million in annual savings, which equates to nearly 40% of the shared costs and overhead being reduced without affecting growth capabilities.
Positive Impact of Healthcare Sale
The sale of the healthcare business unlocked value in a non-strategic business, allowing Navient to increase share repurchases and retire unsecured debt.
Lowlights
Core Earnings Loss
Navient reported a core earnings loss per share of $0.24 in Q4, with adjustments leading to an adjusted core earnings of $0.25 per share.
Increased Delinquencies and Provisions
Delinquencies in both FFELP and private portfolios increased, leading to a $32 million build in reserves for private education loans due to reduced collections.
Regulatory and Restructuring Costs
The company incurred $0.06 per share in regulatory and restructuring expenses related to strategic actions and the settlement of the CFPB lawsuit.
Delayed Government Services Sale
The sale of the government services business was delayed, resulting in a $0.20 loss per share due to a contract loss and impaired value.
Company Guidance
During Navient's fourth-quarter earnings call for 2024, the company provided detailed guidance for 2025, emphasizing several key financial metrics and strategic initiatives. Navient reported a GAAP earnings per share of $0.22 for the quarter and a full-year GAAP EPS of $1.18. On a core earnings basis, the fourth-quarter results were a loss per share of $0.24, with a full-year core EPS of $2. The guidance for 2025 projects core earnings per share to range between $1.00 and $1.20, excluding $0.26 of expenses related to transition services agreements. The company anticipates a 30% growth in loan originations, primarily in the second half of the year, and expects to maintain a net interest margin between 270 and 280 basis points for its Consumer Lending segment. Navient plans to continue optimizing its cost structure, targeting a reduction of $120 million in annual expenses, and aims to capitalize on potential opportunities from federal loan policy changes. The company also highlighted its strategic focus on growing its consumer segment and improving shareholder value by leveraging its streamlined operations and potential new product offerings.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.