Navistar International Corporation’s (NYSE:NAV) released its most recent earnings update in October 2018, which showed that the company benefited from a significant tailwind, more than doubling its earnings from the prior year. Investors may find it useful to understand how market analysts perceive Navistar International’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
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Analysts’ outlook for next year seems rather subdued, with earnings increasing by a single digit 6.1%. However, the following year seems to show a contrast, with earnings decreasing by -4.7%. This volatility continues into the final year of forecast, with earnings arriving at US$318m.
Although it’s helpful to understand the growth rate year by year relative to today’s value, it may be more insightful evaluating the rate at which the earnings are rising or falling every year, on average. The pro of this method is that it ignores near term flucuations and accounts for the overarching direction of Navistar International’s earnings trajectory over time, fluctuate up and down. To calculate this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 1.3%. This means that, we can anticipate Navistar International will grow its earnings by 1.3% every year for the next few years.
For Navistar International, I’ve compiled three relevant factors you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is NAV worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether NAV is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of NAV? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.