Navistar International (NAV, Financial) reported another excellent quarter for sales of used trucks. On a year-over-year basis, there was 18% growth in sales for Navistar for the entire year.
Making the right moves
In addition, Diamond renewed its used truck overhauling schedule introduced in the summer which proved to be hugely successful. Moreover, Navistar registered impressive sales of commercial parts during the quarter, marking another excellent year of parts performance.
The solid sales recorded for the used truck segment and for the commercial parts segment is believed to drive significant top line and bottom line for the company.
The accelerated cost-cutting efforts of Navistar are forecasted to bring the company back to profitability while allowing it to execute on its key investment and growth opportunities.
In 2014, the number of delivered Class 8 trucks reached the peak levels since the fiscal year 2006. Better company profitability, improved transportation, expanding tonnage coupled with enhanced innovative truck fuel economy resulted in greater demand for Class 8 trucks. Similarly, Navistar’s strategic joint venture with JAC in China along with the expanding traction for the Class 8 trucks is believed to significantly benefit the truck major in a long run given the size of the ever-expanding Chinese market.
Improving statistics
The chargeouts for the Class 6 and Class 7 trucks improved more than 41% during the fourth quarter on a year-over-year basis and grew 9% during fiscal year 2014 as compared to last year as it launched several other ISP configurations. Navistar expects medium-duty to deliver the same performance as heavy with it being continuously introducing extra body in chassis configurations and completely concluding this transition in the beginning of 2015.
Navistar also concluded the year with a solid backlog of orders. Its conventional markets grew by 24% for the entire fiscal year 2014 over last year. Improving the market share and expanding sales continue to be the company’s top priority and after satisfying its customers completely.
The improved performance of the Class 6 and Class 7 trucks for the quarter coupled with a robust backlog of orders for Navistar is estimated to expand the customer orders and highlights the company key growth strategies allowing it to maintain a solid line of customer orders.
Navistar recorded a solid liquidity position for the quarter. It concluded the quarter with overall marketable securities, cash equivalents and manufacturing cash of worth $1 billion.
The truck major expects manufacturing cash by the concluding first quarter to be in $700 million to $800 million range. Moreover, the overall cash flow for 2015 is forecasted to enhance by more than $100 million as compared to last year’s first quarter.
The impressive liquidity position of Navistar is expected to significantly encourage the company in making other solid strategic investments, going forward.
Navistar reported 342,000 units of industry volume in 2014 and expects industry volumes to grow continuously in 350,000 to 380,000 units range for 2015.
Navistar illustrated solid fiscal fourth-quarter results, depicting reducing losses, but missed Wall Street expectations.
Conclusion
Finally, the investors are advised to stay away from Navistar as of now looking at the poor growth prospects with PEG ratio of 6.72. The company stock also looks overvalued. The profit margin of -5.73% depicts no profit but loss. Diluted EPS of -7.60 indicate loss in investor earnings. Additionally, Navistar has a debt-laden balance sheet with total debt of $5.22 billion against total cash position of $1.02 billion only.
