Navistar International Corporation (NAV) Falls on Missed Expectations

Shares of Lisle, Illinois, based Navistar International Corporation (NAV), fell sharply amid a down day on Wall Street. Navistar's stock dropped 16.98%, falling $5.95 per share, to close at 29.10, on volume of 4,580,210 shares. Even though the company substantially lowered is loss for the quarter, and sales grew, the income results came in below analysts expectations, and the stock sold off.

Founded in 1902, Navistar International Corporation manufacturers commercial trucks, buses, defense vehicles and engines.
The company is engaged in the manufacturer of International brand commercial and military trucks, IC Bus brand buses and MaxxForce brand diesel engines under the Monaco RV family of brands. It also provides service parts for all makes of trucks and trailers. The company operates its business through four segments: North America Truck, North America Parts, Global Operations and Financial Services. For the fiscal year ended October 31, 2013, the company had a net loss of $-857 million, on total revenue of $10.78 billion. The company employs 16,500 people and its stock trades on the NYSE.

The company reported that for the fourth quarter ended October 31 that it had a net loss of $72 million, or $0.88 per share, compared to a net loss of $154 million, or $1.91 per share a year earlier. However, in a poll by Thomson Reuters, analysts had been expecting a positive net income of .15 per share. The report of a substantial loss, against the expectation of a small profit, caused the stock to fall off.

Total revenue however came in close to analysts expectations. The company reported total revenue for the quarter of $3.01 billion, against analysts expectations of $3.02 billion. Year-over-year, total revenue grew by 9.03%. The increase in sales, coupled with the substantial drop in the company's net income indicate a positive direction for the company, but investors weren't buying into the positives on Tuesday.

"Our fourth quarter results - ??and the results for the entire fiscal year - ??reflect our continued progress improving business operations across the enterprise and positive trends in the North American industry," said Troy A. Clarke, Navistar president and chief executive officer. "In 2014, we increased our production, chargeouts and order backlog; continued to reduce warranty spend; and achieved structural cost savings that further lowered our breakeven point."

Meanwhile, the results for the full fiscal year were less rosy. Total revenues for the year came in at $10.806 billion, only slightly higher than the 2013 total of $10.78 billion. The net loss for the current year came in at $622 million, compared to a net loss of $857 million in 2013. Though losses for the year showed significant improvement, they remain substantial, particularly as losses continued into the most recent quarter.

Navistar has been faced with rising costs for warranty claims as well as for expenses related to adopting new emissions technologies for its engines. Tuesday's news comes on the heals of an announcement by the company that it plans to close an engine components factory that was part of a failed effort to build its own truck engines.

Other News About Navistar International Corporation
Navistar to Close Indianapolis Engine-Component Plant
Navistar plans to close an Indianapolis foundry that makes engine components.
Navistar International Is Making A Comeback
Navistar's short-term pain will pave way for long-term growth.

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Published on Dec 17, 2014
By Kevin Mercadante

Copyrighted 2016. Content published with author's permission.

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