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Navient (NAVI)
NASDAQ:NAVI

Navient (NAVI) AI Stock Analysis

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Navient

(NASDAQ:NAVI)

Rating:69Neutral
Price Target:
$14.50
▼(-4.61%Downside)
Navient's overall stock score reflects a combination of strong technical momentum and strategic corporate actions, weighed down by high leverage and valuation concerns. The company's mixed financial performance and macroeconomic uncertainties further temper the outlook.
Positive Factors
Financial Performance
The main driver of better EPS was higher FFELP spread of 61 bps, above the estimate of 50 bps.
Loan Origination
NAVI originated $508mm in private education loans, significantly higher compared to the previous year.
Negative Factors
Earnings Guidance
The 2025 EPS guide came in lighter at $1.00-1.20 on weaker NIM.
Profitability Challenges
Core profitability still under pressure, waiting on NAVI's plans to drive profitable growth.

Navient (NAVI) vs. SPDR S&P 500 ETF (SPY)

Navient Business Overview & Revenue Model

Company DescriptionNavient Corporation provides education loan management and business processing solutions for education, healthcare, and government clients at the federal, state, and local levels in the United States. It operates through three segments: Federal Education Loans, Consumer Lending, and Business Processing. The company owns Federal Family Education Loan Program (FFELP) loans that are insured or guaranteed by state or not-for-profit agencies; and performs servicing and asset recovery services on its own loan portfolio, as well as asset recovery services on FFELP loans owned by other institutions. It also owns, originates, acquires, and services refinance and in-school private education loans; and offers healthcare services that include revenue cycle outsourcing, accounts receivable management, extended business office support, consulting engagement, and public health programs, as well as business processing services to state governments, agencies, court systems, municipalities, and parking and tolling authorities. In addition, the company provides customizable solutions for its clients that include hospitals, hospital systems, medical centers, large physician groups, other healthcare providers, and public health departments; and corporate liquidity portfolio services. Navient Corporation was founded in 1973 and is headquartered in Wilmington, Delaware.
How the Company Makes MoneyNavient makes money primarily through servicing student loans and collecting fees for its loan management services. The company earns revenue by receiving servicing fees from the U.S. Department of Education for managing federal student loans as well as from private lenders for handling private education loans. Additionally, Navient generates income through asset recovery services, where it assists in the collection of defaulted loans, earning commissions based on the amounts recovered. Significant factors contributing to Navient's earnings include interest income from loan portfolios it holds and partnerships with educational and financial institutions that leverage its loan servicing expertise.

Navient Earnings Call Summary

Earnings Call Date:Apr 30, 2025
(Q1-2025)
|
% Change Since: 21.12%|
Next Earnings Date:Jul 29, 2025
Earnings Call Sentiment Neutral
The earnings call showcased significant achievements in loan origination growth, net interest margin improvement, and operating expense reductions. However, challenges remain with increased delinquency rates and macroeconomic uncertainty. The highlights and lowlights seem balanced with promising growth tempered by economic headwinds.
Q1-2025 Updates
Positive Updates
Strong Loan Origination Growth
Refinance loan volume doubled from the same period a year ago, resulting in a 46% increase in originations compared to last quarter. The profile of these borrowers is strong, with 55% being students with graduate degrees.
Net Interest Margin Improvement in FFELP Portfolio
NIM for the first quarter was 61 basis points, 18 basis points higher than the fourth quarter, driven by a slowdown in prepayment activity.
Completion of Government Services Business Sale
Completed the sale in February, which along with previous sales resulted in over $400 million of net proceeds and represents the divestment of the entirety of Navient's Business Processing segment.
Expense Reduction Progress
Operating expenses were reduced by nearly 30% to $130 million, with corporate shared services expenses nearly 20% lower than a year ago.
Negative Updates
Increase in Delinquency Rates
Greater than 90-day delinquency rates increased to 10.2% in the Federal Education Loans segment, with higher-than-expected delinquency rates also in the private education loans.
Provision Expenses and Reserve Adjustments
The provision expense for FFELP loans was $8 million and $22 million for private education loans, primarily driven by higher-than-expected delinquency rates.
Macro-Economic Uncertainty
The outlook for the year is highly dependent on macroeconomic conditions, with the current environment described as exceptionally uncertain, affecting the potential for loan origination volume and FFELP prepayments.
Company Guidance
During the Navient First Quarter 2025 Earnings Call, guidance was provided on several key metrics. The company reported a 46% increase in loan originations from the previous quarter, with refi loan volume doubling compared to the same period last year. Approximately 55% of the refi originations were for students with graduate degrees, indicating high credit quality. Net interest margin (NIM) in the Federal Family Education Loan Program (FFELP) portfolio improved due to reduced prepayment activity, resulting in a lower loan premium amortization expense. The sale of the government services business was completed, contributing to a significant reduction in operating expenses and a decrease in the employee base by over 80% compared to the end of 2023. The company repurchased $35 million in shares under its current strategy, which is more opportunistic than programmatic, balancing future growth opportunities with purchasing shares at a discount to tangible book value. The core earnings per share for the quarter were $0.25, or $0.28 when adjusted for regulatory and restructuring expenses, with a full-year guidance of $1 to $1.20 per share. The uncertain macroeconomic environment, particularly interest rates, remains a critical factor in the company's outlook.

Navient Financial Statement Overview

Summary
Navient's financial performance is mixed. Strong gross margins and operational efficiency are countered by declining revenues and high leverage. The balance sheet indicates high debt levels, which could be risky, but the company generates substantial cash flows. Investors should be cautious given the potential volatility.
Income Statement
72
Positive
Navient's income statement shows mixed results. The gross profit margin for TTM is healthy at 92.9%, indicating efficient cost management. However, the net profit margin is relatively low at 1.63%, suggesting high operating or non-operating expenses. Revenue growth has been inconsistent, with a notable decline in TTM compared to the previous year. EBIT and EBITDA margins remain robust at 71.34% and 84.79%, respectively, highlighting strong operating profitability.
Balance Sheet
68
Positive
The balance sheet reveals high leverage with a debt-to-equity ratio of 1.88, which could pose risks during economic downturns. The return on equity (ROE) for TTM is modest at 2.16%, indicating limited returns for shareholders. However, the equity ratio stands at 5.08%, showing a relatively small reliance on equity financing compared to total assets. While the company maintains a substantial asset base, the high level of debt warrants cautious optimism.
Cash Flow
60
Neutral
Cash flow analysis indicates a challenging environment. Free cash flow decreased significantly, with a negative growth rate in TTM. The operating cash flow to net income ratio is robust at 6.21, suggesting strong cash generation relative to net income. However, the free cash flow to net income ratio of 6.21 indicates reliance on operating cash flows for capital expenses.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue3.44B3.81B1.16B3.81B2.21B1.69B
Gross Profit3.20B3.49B356.00M1.74B1.44B979.00M
EBITDA2.97B3.47B3.95B2.93B2.66B0.00
Net Income56.00M131.00M228.00M645.00M717.00M412.00M
Balance Sheet
Total Assets50.95B51.79B61.38B70.80B80.61B87.41B
Cash, Cash Equivalents and Short-Term Investments2.06B2.10B839.00M1.53B905.00M1.18B
Total Debt47.24B47.91B57.30B66.90B76.98B83.94B
Total Liabilities48.36B49.15B58.62B67.82B78.00B84.97B
Stockholders Equity2.59B2.64B2.76B2.98B2.60B2.43B
Cash Flow
Free Cash Flow348.00M459.00M676.00M305.00M702.00M987.00M
Operating Cash Flow348.00M459.00M676.00M305.00M702.00M987.00M
Investing Cash Flow6.80B8.47B7.36B10.59B6.67B6.45B
Financing Cash Flow-8.04B-9.62B-10.05B-9.66B-7.33B-7.68B

Navient Technical Analysis

Technical Analysis Sentiment
Positive
Last Price15.20
Price Trends
50DMA
13.52
Positive
100DMA
13.08
Positive
200DMA
13.66
Positive
Market Momentum
MACD
0.51
Negative
RSI
68.38
Neutral
STOCH
71.35
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NAVI, the sentiment is Positive. The current price of 15.2 is above the 20-day moving average (MA) of 14.12, above the 50-day MA of 13.52, and above the 200-day MA of 13.66, indicating a bullish trend. The MACD of 0.51 indicates Negative momentum. The RSI at 68.38 is Neutral, neither overbought nor oversold. The STOCH value of 71.35 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NAVI.

Navient Risk Analysis

Navient disclosed 32 risk factors in its most recent earnings report. Navient reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Navient Peers Comparison

Overall Rating
UnderperformOutperform
Sector (67)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
78
Outperform
$5.46B56.14137.28%91.69%702.31%
69
Neutral
$1.57B30.672.09%4.18%-21.19%-67.35%
OMOMF
68
Neutral
$7.01B12.4717.46%7.06%9.07%
67
Neutral
$16.81B11.859.77%3.76%12.07%-8.35%
SLSLM
66
Neutral
$7.22B12.3927.60%1.54%-0.70%-12.72%
LCLC
62
Neutral
$1.40B27.893.86%5.72%31.82%
40
Underperform
$151.41M-907.81%-520.78%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
NAVI
Navient
15.20
1.01
7.12%
SLM
SLM
33.14
11.83
55.51%
LC
LendingClub
12.50
3.17
33.98%
OMF
OneMain Holdings
59.02
13.65
30.09%
CURR
Currenc Group
2.03
-9.62
-82.58%
SEZL
Sezzle Inc.
166.09
152.39
1112.34%

Navient Corporate Events

Private Placements and FinancingRegulatory Filings and Compliance
Navient Completes $500 Million Senior Notes Offering
Positive
May 19, 2025

On May 19, 2025, Navient Corporation completed a public offering of $500 million in 7.875% Senior Notes due 2032. This offering was conducted under the company’s shelf registration statement filed with the SEC earlier in May 2025. The company entered into an Underwriting Agreement with several financial institutions, including RBC Capital Markets and Barclays Capital, for the sale and resale of these notes. This strategic financial move is expected to impact Navient’s operations by potentially enhancing its financial flexibility and market position.

The most recent analyst rating on (NAVI) stock is a Hold with a $15.00 price target. To see the full list of analyst forecasts on Navient stock, see the NAVI Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 05, 2025