Navient Corporation NAVI has reported fourth-quarter 2024 adjusted earnings per share (EPS) of 25 cents, surpassing the Zacks Consensus Estimate of 20 cents. It reported earnings of 70 cents in the prior-year quarter.
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For 2024, adjusted EPS was $2, which missed the Zacks Consensus Estimate of $2.41. This compares unfavorably with $2.45 reported in the year-ago quarter.
Results were driven by a rise in other income and lower expenses. A decline in provision for loan losses was another positive. However, a decrease in net interest income (NII) was a headwind.
Navient’s GAAP net income was $24 million against a net loss of $28 million recorded in the prior-year quarter.
For 2024, the company reported a GAAP net income of $131 million, which declined 42.5% year over year.
Navient’s NII & Expenses Decline
NII declined 30.6% year over year to $134 million in the fourth quarter. It missed the Zacks Consensus Estimate of $151.05 million.
In 2024, core NII was down 39.4% from the prior year to $573 million. Also, the top line missed the Zacks Consensus Estimate of $580.8 million.
Total other income increased 41.9% year over year to $88 million. The rise primarily stemmed from a gain on the sale of a subsidiary.
Provision for loan losses was $45 million, down 18.2% from the prior-year quarter.
Total expenses decreased 25.5% year over year to $152 million.
NAVI’s Quarterly Performance of Segments
Federal Education Loans: The segment generated a net income of $10 million, which declined 84.1% year over year.
As of Dec. 31, 2024, the company’s net FFELP loans were $30.6 billion, down 18.6% sequentially.
Consumer Lending: This segment reported a net income of $37 million, which decreased 19.6% from the year-ago quarter.
The private education loan delinquency rate greater than 30 days was 6.1% compared with 5.1% in the prior-year quarter.
As of Dec. 31, 2024, the company’s private education loans were $15.7 billion, which decreased 7% from the prior quarter. Navient originated $322 million of private education refinance loans in the reported quarter.
Business Processing: The company reported segmental net loss of $20 million against a net income of $8 million in the year-ago quarter.
Navient’s Liquidity
To meet liquidity needs, Navient expects to utilize various sources, including cash and investment portfolio, predictable operating cash flows provided by operating activities, the repayment of principal on unencumbered education loan assets, and distributions from securitization trusts. It may also draw down on the secured FFELP Loan and Private Education Loan facilities, issue term asset-backed securities (ABS), enter additional Private Education Loan and ABS repurchase facilities, or issue additional unsecured debt.
Notably, it had $722 million of total unrestricted cash and liquid investments as of Dec. 31, 2024.
Navient’s Capital Distribution Activities
In the fourth quarter, the company paid out $17 million in common stock dividends.
In the reported quarter, Navient repurchased shares of common stock for $65 million. As of Dec. 31, 2024, there was $111 million of the remaining share-repurchase authority.
Our Take on NAVI
NAVI has been an eminent portfolio holder of private education loans. Its diversified business segments are likely to support revenue growth. The strategic actions undertaken to control costs are expected to support financials in the upcoming period. The company’s fourth-quarter results benefited from a decline in expenses and a rise in other income. However, lower NII remains a near-term concern.
Navient Corporation Price, Consensus and EPS Surprise
Navient Corporation price-consensus-eps-surprise-chart | Navient Corporation Quote
Currently, Navient carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of NAVI’s Peers
Capital One’s COF fourth-quarter 2024 adjusted earnings of $3.09 per share surpassed the Zacks Consensus Estimate of $2.66. The bottom line also compared favorably with $2.24 in the prior-year quarter.
COF’s results gained from higher NII and non-interest income and rise in loans and deposits. Also, provisions declined during the quarter. However, the increase in expenses was the undermining factor.
Ally Financial’s ALLY fourth-quarter 2024 adjusted earnings of 78 cents per share surpassed the Zacks Consensus Estimate of 59 cents. Also, the bottom line reflected a jump of 95% from the year-ago quarter.
ALLY’s results benefited from a rise in net finance revenues. Further, lower expenses and a decline in credit costs provided support. However, lower other revenues a decline in net finance receivables and loans and deposits were the undermining factors.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
