NAV - Embedded Expectations Analysis - 2018 08 24
Navistar International Corporation (NAV:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 16.5x Uniform P/E. However, even at these levels, the market has bullish expectations for the firm, while management appears concerned about the sustainability of recent performance and current industry tailwindsSpecifically, management may lack confidence in the sustainability of industry tailwinds, and may be overstating the potential for their medium-duty trucks to penetrate the market rapidly. Additionally, they may lack confidence in their ability to sustain elevated net income and revenue levels. Moreover, they appear to lack confidence in the timing of their electric school bus market introduction, and in their modular approach to truck designs. Also, they may lack confidence in their ability to meet increased industry expectations for Class 8 retail deliveries and in their serial hybrid application. Lastly, they may lack confidence in their ability to maintain their strong market share in Mexico.
Navistar International is a holding company. Through its subsidiaries, the company is a manufacturer of International? brand commercial trucks, proprietary diesel engines, and IC Bus? (IC) brand school and commercial buses. The company's segments include: Truck, which manufactures and distributes trucks and buses along with production of proprietary engines; Parts, which provides proprietary products to support the International commercial truck, IC Bus, proprietary engine lines, and export parts business; and Global Operations, which consists of the operations of its subsidiary, International Industria Automotiva da America do Sul Ltda that manufactures and distributes mid-range diesel engines.
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