Why Navient Corp (NASDAQ: NAVI) stock is rising

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Navient Corp (NASDAQ: NAVI) stock rose over 4.5% in the pre-market session of January 22nd, 2020 (as of 9:14 am GMT-5; Source: Google finance) after the company posted better than expected results for fourth quarter of FY 19. The company has reported fourth-quarter net income of $171 million, as compared to $72 million, in the year-ago period.

Moreover, in federal education loans, for the fourth quarter of 2019, the company had reported the core Earnings of $136 million compared to $147 million in the year-ago quarter. Net interest income had declined $17 million mainly due to the continued natural paydown of the portfolio. The provision for loan losses fell $2 million. Charge-offs fell 31% to $9 million from the year-ago quarter. Other revenue  had grown $11 million mainly due to a $14 million (27%) increase in asset recovery revenue, mainly due to higher account resolution.  Operating expenses were unchanged mainly due to the increase in asset recovery revenue which was offset by reduced expenses in connection with efficiency initiatives. The company had acquired $280 million of FFELP Loans in the fourth quarter.

Furthermore, in consumer lending, for the fourth quarter of 2019, the company had delivered the Core Earnings were $89 million compared to $66 million in the year-ago quarter. Net interest income in the quarter had increased $6 million mainly due to the growth of the Refinance Loan portfolio and an improved cost of funds.

NAVI in the fourth quarter of 2019 has reported the adjusted earnings per share of 67 cents, beating the analysts’ estimates for the adjusted earnings per share of 58 cents, according to analysts surveyed by FactSet. The company had reported the adjusted revenue of $294 million in the fourth quarter of 2019, missing the analysts’ estimates for revenue of $298.3 million.

Additionally, during the fourth quarter of 2019, the company had repurchased 5.8 million common shares. In October 2019, the company’s board of directors had approved an additional $1 billion multi-year share repurchase program. The company during the quarter paid $34 million in common stock dividends. In addition, the company during the fourth quarter of 2019 had issued $1.7 billion in term ABS. The company had repurchased $1.0 billion of senior unsecured debt, which resulted in a $14 million pre-tax Core Earnings loss. In the year-ago quarter, the company had repurchased $1.4 billion of senior unsecured debt resulting in an $18 million pre-tax Core Earnings gain.

For the first quarter 2020 the analysts model adjusted earnings of 70 cents a share.

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