With -13.1% EPS Drop, Should Navistar International Corporation's (NAV) Recent Track Record Be A Cause Of Concern?

For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Navistar International Corporation (NYSE:NAV) useful as an attempt to give more color around how Navistar International is currently performing. Check out our latest analysis for Navistar International

Was NAV's recent earnings decline worse than the long-term trend and the industry?

I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend allows me to assess different stocks on a similar basis, using the most relevant data points. For Navistar International, the latest earnings -$140.0M, which, relative to the prior year's figure, has become more negative. Given that these values are fairly short-term, I have calculated an annualized five-year figure for Navistar International's net income, which stands at -$434.9M. This means despite the fact that net income is negative, it has become less negative over the years.

Additionally, we can analyze Navistar International's loss by researching what’s going on in the industry on top of within the company. Initially, I want to quickly look into the line items. Revenue growth over last few years has been negative at -8.22%. The key to profitability here is to make sure the company’s cost growth is well-managed. Viewing growth from a sector-level, the US machinery industry has been growing its average earnings by double-digit 17.33% over the past year, and a more muted 4.54% over the past five. This means any uplift the industry is enjoying, Navistar International has not been able to reap as much as its industry peers.

What does this mean?

Though Navistar International's past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to envisage what will occur going forward, and when. The most valuable step is to examine company-specific issues Navistar International may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Navistar International to get a more holistic view of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for NAV’s future growth? Take a look at our free research report of analyst consensus for NAV’s outlook.

2. Financial Health: Is NAV’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.