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Why Navistar International Corp (NAV) Earnings Could Look Scary

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Navistar International Corp (NYSE:NAV) will release its quarterly report on Wednesday, and investors don’t expect good news from the trucking giant. Yet even if Navistar International Corp (NYSE:NAV) earnings continue to look as bad as they have in recent quarters, relief might not be too far away for beleaguered investors.

Navistar International Corp (NYSE:NAV)

Navistar International Corp (NYSE:NAV) is the company behind a wide variety of industrial vehicles, including trucks for both commercial and military use as well as school buses and recreational vehicles. It also produces diesel engines for vehicles. Yet troubles in meeting regulatory guidelines has led to some huge disruptions in Navistar International Corp (NYSE:NAV)’s business, and even with a solution in place, the company could continue to struggle for a while longer. Let’s take an early look at what’s been happening with Navistar International Corp (NYSE:NAV) over the past quarter and what we’re likely to see in its report.

Stats on Navistar

Analyst EPS Estimate ($1.32)
Year-Ago EPS ($0.20)
Revenue Estimate $2.92 billion
Change From Year-Ago Revenue (11.9%)
Earnings Beats in Past 4 Quarters 2

Source: Yahoo! Finance.

Will Navistar earnings ever go positive?
In recent months, analysts have gotten a lot more pessimistic about Navistar International Corp (NYSE:NAV) earnings prospects, nearly tripling their loss estimates both for the July quarter and for the full fiscal year. The stock hasn’t done all that badly, though, falling just 5% since late May.

Navistar has been under pressure for a long time. Not only did the SEC have to investigate the company last year over alleged poor disclosure of its weak financial condition, but Navistar had to resort to making a deal with rival Cummins Inc. (NYSE:CMI) in order to obtain engine technology that would allow it to comply with EPA emissions standards. With new regulations coming in future years, Navistar faces the ongoing challenge of keeping up with higher standards.

Navistar hasn’t been entirely locked out of the trucking market, though. The company won several contracts from the Defense Department in support of its military vehicles, including its MaxxPro mine-resistant, ambush-protected armored vehicle. On the commercial front, Navistar won part of an order in May from trucking company Con-way Inc (NYSE:CNW), which purchased 200 ProStar vehicles from the company. Still, the fact that rival PACCAR Inc (NASDAQ:PCAR) got an even bigger portion of the Con-way Inc (NYSE:CNW) order is just one more sign of the ongoing struggles Navistar faces.

Still, the big challenge Navistar faces is the pace at which its rivals have moved forward.

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