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Navient (NAVI)
NASDAQ:NAVI
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Navient
(NASDAQ:NAVI)
63Neutral
Positive Factors
Loan Origination
NAVI originated $508mm in private education loans, significantly higher compared to the previous year.
Strategic Actions
Navient announced an agreement to sell the Government Services business to Gallant Capital Partners, seen as a step forward in its strategic action plan.
Negative Factors
Earnings
Reported GAAP EPS loss of $0.02.
Financial Performance
Revenue and earnings growth remain challenged despite cost reductions, which could impact future financial performance.
Strategic Vision
Management has not articulated a clear strategic vision for investors, creating some uncertainty.
Navient (NAVI) vs. S&P 500 (SPY)
Market Cap
$1.39B
Dividend Yield4.65%
Average Volume (3M)798.93K
Price to Earnings (P/E)27.1
Beta (1Y)1.00
Revenue Growth-21.19%
EPS Growth-67.35%
CountryUS
Employees2,100
SectorFinancial
Sector Strength87
IndustryFinancial - Credit Services
Share Statistics
EPS (TTM)0.25
Shares Outstanding101,150,215
10 Day Avg. Volume669,147
30 Day Avg. Volume798,928
Financial Highlights & Ratios
PEG Ratio>-0.01
Price to Book (P/B)0.50
Price to Sales (P/S)0.00
P/FCF Ratio3.66
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$13.06Price Target Upside-5.09% Downside
Rating ConsensusHold
Number of Analyst Covering8
Navient Business Overview & Revenue Model
Company DescriptionNavient Corporation provides education loan management and business processing solutions for education, healthcare, and government clients at the federal, state, and local levels in the United States. It operates through three segments: Federal Education Loans, Consumer Lending, and Business Processing. The company owns Federal Family Education Loan Program (FFELP) loans that are insured or guaranteed by state or not-for-profit agencies; and performs servicing and asset recovery services on its own loan portfolio, as well as asset recovery services on FFELP loans owned by other institutions. It also owns, originates, acquires, and services refinance and in-school private education loans; and offers healthcare services that include revenue cycle outsourcing, accounts receivable management, extended business office support, consulting engagement, and public health programs, as well as business processing services to state governments, agencies, court systems, municipalities, and parking and tolling authorities. In addition, the company provides customizable solutions for its clients that include hospitals, hospital systems, medical centers, large physician groups, other healthcare providers, and public health departments; and corporate liquidity portfolio services. Navient Corporation was founded in 1973 and is headquartered in Wilmington, Delaware.
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 presents a mixed financial picture. Strong gross margins and operational efficiency are offset by declining revenues and high leverage. The balance sheet shows high debt levels, which could be risky, but the company continues to generate substantial cash flows. While the financial health is stable, the high leverage and fluctuating revenues suggest potential volatility. Investors should weigh these factors carefully when considering Navient's financial position.Income Statement
Navient's income statement shows mixed results. The gross profit margin for TTM is healthy at 92.9%, indicating efficient cost management. However, the net profit margin is relatively low at 1.63%, suggesting high operating or non-operating expenses. Revenue growth has been inconsistent, with a notable decline in TTM compared to the previous year. EBIT and EBITDA margins remain robust at 71.34% and 84.79%, respectively, highlighting strong operating profitability.72
Positive
Balance Sheet
The balance sheet reveals high leverage with a debt-to-equity ratio of 1.88, which could pose risks during economic downturns. The return on equity (ROE) for TTM is modest at 2.16%, indicating limited returns for shareholders. However, the equity ratio stands at 5.08%, showing a relatively small reliance on equity financing compared to total assets. While the company maintains a substantial asset base, the high level of debt warrants cautious optimism.68
Positive
Cash Flow
Cash flow analysis indicates a challenging environment. Free cash flow decreased significantly, with a negative growth rate in TTM. The operating cash flow to net income ratio is robust at 6.21, suggesting strong cash generation relative to net income. However, the free cash flow to net income ratio of 6.21 indicates reliance on operating cash flows for capital expenses.60
Neutral
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 3.44B | 3.81B | 1.28B | 1.74B | 2.21B | 1.69B | Gross Profit |
| 3.20B | 3.49B | 4.40B | 1.18B | 1.00B | 724.00M | EBIT |
| 2.46B | 2.81B | 346.00M | 2.93B | 936.00M | 532.00M | EBITDA |
| 2.97B | 3.47B | 3.95B | 2.93B | 2.66B | 0.00 | Net Income Common Stockholders |
| 56.00M | 131.00M | 228.00M | 645.00M | 717.00M | 412.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 2.79B | 2.10B | 839.00M | 1.53B | 905.00M | 1.18B | Total Assets |
| 61.38B | 51.79B | 61.38B | 70.80B | 80.61B | 87.41B | Total Debt |
| 57.63B | 47.91B | 57.30B | 66.90B | 76.98B | 83.94B | Net Debt |
| 54.84B | 47.18B | 56.46B | 65.36B | 76.07B | 82.76B | Total Liabilities |
| 58.62B | 49.15B | 58.62B | 67.82B | 78.00B | 84.97B | Stockholders Equity |
| 2.76B | 2.64B | 2.76B | 2.98B | 2.60B | 2.43B |
| Cash Flow | Free Cash Flow | ||||
| 348.00M | 459.00M | 676.00M | 305.00M | 702.00M | 987.00M | Operating Cash Flow |
| 348.00M | 459.00M | 676.00M | 305.00M | 702.00M | 987.00M | Investing Cash Flow |
| 6.80B | 8.47B | 7.36B | 10.59B | 6.67B | 6.45B | Financing Cash Flow |
| -8.04B | -9.62B | -10.05B | -9.66B | -7.33B | -7.68B |
Navient Technical Analysis
Positive
13.76
Price Trends
12.59
Positive
13.09
Positive
14.02
Negative
Market Momentum
0.44
Negative
65.07
Neutral
77.74
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NAVI, the sentiment is Positive. The current price of 13.76 is above the 20-day moving average (MA) of 12.69, above the 50-day MA of 12.59, and below the 200-day MA of 14.02, indicating a neutral trend. The MACD of 0.44 indicates Negative momentum. The RSI at 65.07 is Neutral, neither overbought nor oversold. The STOCH value of 77.74 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 | $3.29B | 33.38 | 137.28% | ― | 91.69% | 702.31% | |
68 Neutral | $6.16B | 10.97 | 17.46% | 8.03% | 9.07% | ― | |
66 Neutral | $7.07B | 12.13 | 27.60% | 1.42% | -0.70% | -12.72% | |
64 Neutral | $12.82B | 9.87 | 7.67% | 17000.34% | 12.39% | -5.85% | |
63 Neutral | $1.39B | 27.10 | 2.09% | 4.65% | -21.19% | -67.35% | |
56 Neutral | $1.22B | 23.93 | 3.86% | ― | 5.72% | 31.82% | |
39 Underperform | $36.72M | ― | -907.81% | ― | ― | -430.67% |
* Financial Sector Average
Performance Comparison
NAVI
Navient
13.76
-0.71
-4.91%
SLM
SLM
33.80
13.54
66.83%
LC
LendingClub
10.57
1.19
12.69%
OMF
OneMain Holdings
51.74
5.86
12.77%
CURR
Currenc Group
0.79
-10.73
-93.14%
SEZL
Sezzle Inc.
98.75
86.39
698.95%
Navient Earnings Call Summary
Earnings Call Date:Apr 30, 2025
(Q1-2025)
| % Change Since: 8.35%|
Next Earnings Date:Jul 29, 2025
Earnings Call Sentiment Neutral
The earnings call showcased significant achievements in loan origination growth, net interest margin improvement, and operating expense reductions. However, challenges remain with increased delinquency rates and macroeconomic uncertainty. The highlights and lowlights seem balanced with promising growth tempered by economic headwinds.Q1-2025 Updates
Positive Updates
Strong Loan Origination Growth
Refinance loan volume doubled from the same period a year ago, resulting in a 46% increase in originations compared to last quarter. The profile of these borrowers is strong, with 55% being students with graduate degrees.
Net Interest Margin Improvement in FFELP Portfolio
NIM for the first quarter was 61 basis points, 18 basis points higher than the fourth quarter, driven by a slowdown in prepayment activity.
Completion of Government Services Business Sale
Completed the sale in February, which along with previous sales resulted in over $400 million of net proceeds and represents the divestment of the entirety of Navient's Business Processing segment.
Expense Reduction Progress
Operating expenses were reduced by nearly 30% to $130 million, with corporate shared services expenses nearly 20% lower than a year ago.
Negative Updates
Increase in Delinquency Rates
Greater than 90-day delinquency rates increased to 10.2% in the Federal Education Loans segment, with higher-than-expected delinquency rates also in the private education loans.
Provision Expenses and Reserve Adjustments
The provision expense for FFELP loans was $8 million and $22 million for private education loans, primarily driven by higher-than-expected delinquency rates.
Macro-Economic Uncertainty
The outlook for the year is highly dependent on macroeconomic conditions, with the current environment described as exceptionally uncertain, affecting the potential for loan origination volume and FFELP prepayments.
Company Guidance
During the Navient First Quarter 2025 Earnings Call, guidance was provided on several key metrics. The company reported a 46% increase in loan originations from the previous quarter, with refi loan volume doubling compared to the same period last year. Approximately 55% of the refi originations were for students with graduate degrees, indicating high credit quality. Net interest margin (NIM) in the Federal Family Education Loan Program (FFELP) portfolio improved due to reduced prepayment activity, resulting in a lower loan premium amortization expense. The sale of the government services business was completed, contributing to a significant reduction in operating expenses and a decrease in the employee base by over 80% compared to the end of 2023. The company repurchased $35 million in shares under its current strategy, which is more opportunistic than programmatic, balancing future growth opportunities with purchasing shares at a discount to tangible book value. The core earnings per share for the quarter were $0.25, or $0.28 when adjusted for regulatory and restructuring expenses, with a full-year guidance of $1 to $1.20 per share. The uncertain macroeconomic environment, particularly interest rates, remains a critical factor in the company's outlook.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.