Navient Corp (NASDAQ: NAVI)

Sector: Financial Services Industry: Credit Services CIK: 0001593538
Market Cap 1.25 Bn
P/B 0.51
P/E -25.00
P/S 3.00
ROIC (Qtr) -0.12
Div Yield % 6.15
Rev 1y % (Qtr) -101.98
Total Debt (Qtr) 46.33 Bn
Debt/Equity (Qtr) 19.00

About

Price action

Investment thesis

Bull case

  • Operating cash flow of 275M provides strong 12.50x coverage of stock compensation 22M, indicating sustainable incentive practices.
  • Strong operating cash flow of 275M provides 1.59x coverage of SG&A expenses 173M, showing efficient operational cost management.
  • Cash reserves of 1.87B provide ample 74.88x coverage of acquisition spending 25M, enabling strategic growth opportunities.
  • Strong tangible asset base of 48.87B provides 1954.84x coverage of acquisition spending 25M, enabling strategic growth.
  • Retained earnings of 4.57B represent substantial 1.87x of equity 2.44B, indicating strong internal capital generation.

Bear case

  • Operating cash flow of 275M barely covers its investment activities of 2.87B, with a coverage ratio of 0.10, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 275M provides thin coverage of dividend payments of (65M) with a -4.23 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating cash flow of 275M provides minimal -9.82x coverage of tax expenses of (28M), suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Free cash flow of 275M represents just -0.07x of debt issuance (3.86B), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating cash flow of 275M barely covers operating expenses of 321M with a 0.86 ratio, suggesting thin operational efficiency margins and limited flexibility.

Peer comparison

Companies in the Credit Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 V Visa Inc. 686.47 Bn 34.22 17.16 25.17 Bn
2 MA Mastercard Inc 523.39 Bn 36.73 16.63 18.98 Bn
3 AXP American Express Co 265.73 Bn 25.21 4.07 59.23 Bn
4 COF Capital One Financial Corp 114.44 Bn 104.71 3.96 51.48 Bn
5 PYPL PayPal Holdings, Inc. 56.25 Bn 11.44 1.71 11.28 Bn
6 SYF Synchrony Financial 32.84 Bn 9.40 3.40 14.43 Bn
7 SOFI SoFi Technologies, Inc. 29.73 Bn 46.44 8.95 2.81 Bn
8 ALLY Ally Financial Inc. 14.45 Bn 52.55 1.83 20.63 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.94 1.08
EV to Cash from Ops. EV/CFO 168.25 6.69
EV to Debt EV to Debt 1.00 2.90
EV to EBIT EV/EBIT -593.21 -256.83
EV to EBITDA EV/EBITDA -593.21 -63.90
EV to Free Cash Flow [EV/FCF] EV/FCF 168.25 7.70
EV to Market Cap EV to Market Cap 37.02 10.11
EV to Revenue EV/Rev 111.23 10.46
Price to Book Value [P/B] P/B 0.51 3.64
Price to Earnings [P/E] P/E -25.00 14.93
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) -0.77 1.65
Dividend Payout Ratio % Div Payout % (Qtr) -123.10 2.32
Dividend per Basic Share Div per Share (Qtr) 0.64 0.71
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 22.81 5.03
Interest Coverage Interest Coverage 0.00 -67.79
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex Growth (1y) % 0.00 -84.54
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -32.98 7.91
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 5.71
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -163.29 -24.74
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -169.64 -2.60
EBIT Growth (1y) % EBIT 1y % (Qtr) -169.64 12.06
EBT Growth (1y) % EBT 1y % (Qtr) -169.64 -21.28
EPS Growth (1y) % EPS 1y % (Qtr) -168.42 -92.29
FCF Growth (1y) % FCF 1y % (Qtr) -63.86 140.01
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -59.57 8.20
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.01 0.24
Cash Payout Ratio Cash Payout (Qtr) 0.24 0.05
Cash Ratio Cash Ratio 0.00 0.31
Current Ratio Current Ratio 0.00 0.87
Debt to Equity Ratio Debt/Equity (Qtr) 19.00 5.09
Interest Cover Ratio Interest Cover Ratio 0.00 -67.79
Times Interest Earned Times Interest Earned 0.00 -67.79
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -18.80 -18.70
EBIT Margin % EBIT Margin % (Qtr) -18.75 -12.65
EBT Margin % EBT Margin % (Qtr) -18.75 -30.15
Gross Margin % Gross Margin % (Qtr) 100.00 73.89
Net Profit Margin % Net Margin % (Qtr) -12.00 -43.77