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1. Company Snapshot

1.a. Company Description

Navient 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.

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1.b. Last Insights on NAVI

Navient Corporation's recent performance was negatively impacted by its Q2 earnings miss, primarily due to lower net interest income (NII) and higher provisions for loan losses. The company's quarterly earnings of $0.21 per share fell short of the Zacks Consensus Estimate of $0.27 per share. BofA downgraded Navient to Underperform, citing execution risks associated with its growth initiatives. Additionally, the company's dividend announcement of $0.16 per share for Q3 may not be sufficient to offset investor concerns.

1.c. Company Highlights

2. Navient's Q3 2025 Earnings: A Strong Performance

Navient reported a core EPS of $0.29 for the third quarter of 2025, beating estimates of $0.18. The company's net interest margin (NIM) was 84 basis points, up 14 basis points from the second quarter, driven by reduced premium amortization. The company's total delinquencies declined from 19% to 18.1%, and the net charge-off rate increased 1 basis point to 15 basis points. Revenue growth is expected to be negative next year, with analysts estimating a decline of 2.2%.

Publication Date: Nov -04

📋 Highlights
  • Core EPS Adjustment: Adjusted core EPS was $0.29, driven by lower prepayment speeds reducing life-of-loan cash flows by $195 million.
  • Share Repurchase Authorization: Navient announced a $100 million share repurchase program to leverage discounted valuation and enhance shareholder value.
  • Net Interest Margin (NIM) Growth: Q3 NIM rose to 84 basis points, up 14 bps from Q2, due to reduced premium amortization and lower prepayments ($268M vs. $1B YoY).
  • Loan Originations Guidance Raised: Full-year originations guidance increased to $2.4 billion (+30% YoY), reflecting strong demand for graduate and refinance loans.

Segment Performance

The Consumer Lending segment reported a NIM of 239 basis points, up from 232 basis points in the second quarter. The company's quarterly guidance of $0.30 to $0.35 per share incorporates continued strong origination growth, boosted by moderately lower interest rates and continued expense reductions. The company is raising its full-year total loan originations guidance to around $2.4 billion, or over 30% higher than its guidance provided at the beginning of the year.

Prepayment and Default Trends

The company has seen substantially lower prepayment levels, particularly in the FFELP portfolio, and this trend is expected to continue. The change in public policy, particularly around federal loan forgiveness, has impacted the prepayment and default rates in the FFELP portfolio. The company's provision expense is primarily driven by the legacy portfolios, particularly the private legacy portfolio, which is the main source of weakness in the current portfolio.

Valuation and Outlook

At current levels, Navient trades at a P/B Ratio of 0.49 and has a Dividend Yield of 5.25%. The company's ability to finance rapid asset growth through ABS issuances, which will require less equity and other sources of risk capital, is a positive. However, the company's ROE is negative at -1.95%, and the Net Debt / EBITDA ratio is 1.09. With the Grad PLUS program uncertain, the company's ability to attract high-credit-quality, high-balance borrowers will be crucial. The company's guidance for Q4 is $0.30 to $0.35 per share, and the outlook for next year is uncertain due to various factors, including interest rate assumptions.

Competitive Positioning

Navient is well-positioned to take advantage of the opportunity in the graduate loan originations market, with around 20% market share. The refi side is a 2-person race between Navient and one other larger competitor. The graduate market represents $1 billion to $1.4 billion for private players, while Grad PLUS as a total is a $14 billion market. The company is confident in its ability to attract high-credit-quality, high-balance borrowers, and believes there will be a level of multiple expansion in the market.

3. NewsRoom

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Ensign Peak Advisors Inc Reduces Stock Holdings in Navient Corporation $NAVI

Dec -01

Source: defenseworld.net

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Geode Capital Management LLC Sells 60,461 Shares of Navient Corporation $NAVI

Nov -29

Source: defenseworld.net

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NAVI Unveils High-Growth Phase 2 Strategy, Focuses on Scaling Earnest

Nov -20

Source: zacks.com

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Navient Corporation (NAVI) Discusses Strategic Transformation Progress and Growth Plans for Earnest Division Transcript

Nov -20

Source: seekingalpha.com

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20,393 Shares in Navient Corporation $NAVI Bought by Campbell & CO Investment Adviser LLC

Nov -18

Source: defenseworld.net

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Navient declares fourth quarter common stock dividend

Nov -12

Source: globenewswire.com

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Navient to share strategy update, host webcast Nov. 19

Nov -12

Source: globenewswire.com

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Navient Q3 Earnings Beat on NII Growth & Lower Expenses, Provisions Up

Oct -29

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.83%)

6. Segments

Consumer Lending

Expected Growth: 9.27%

Navient Corporation's 9.27% growth in Consumer Lending is driven by increasing demand for personal loans, expansion of online lending platforms, and strategic partnerships. Additionally, the company's focus on refinancing and debt consolidation, as well as its efforts to improve credit quality, have contributed to the growth.

Federal Education Loans

Expected Growth: 7.43%

Navient Corporation's 7.43% growth in Federal Education Loans is driven by increasing college enrollment, rising tuition fees, and government support for student loan programs. Additionally, the company's efficient loan servicing and collection practices, as well as its strong brand recognition, contribute to its growth.

Business Processing

Expected Growth: 10.27%

Navient Corporation's 10.27% growth in Business Processing is driven by increasing demand for student loan servicing, strategic partnerships, and expansion into new markets. Additionally, investments in digital transformation, process automation, and customer experience enhancements have improved operational efficiency, contributing to the segment's growth.

Other

Expected Growth: 8.23%

Navient Corporation's 8.23% growth is driven by increasing demand for student loan refinancing, expansion of its digital platform, and strategic partnerships. Additionally, the company's focus on debt repayment and credit score improvement has led to higher revenue from interest income and fees. Furthermore, Navient's cost-cutting initiatives and efficient operations have contributed to its profitability.

Reconciling Items

Expected Growth: 10.27%

Navient Corporation's 10.27% growth driven by increasing demand for student loan refinancing, expansion into new markets, and strategic partnerships. Additionally, the company's focus on digital transformation, cost savings initiatives, and strong brand recognition contribute to its growth momentum.

7. Detailed Products

Federal Family Education Loans (FFEL)

Navient services and collects FFEL loans, which are federally guaranteed student loans that help students and parents pay for college.

Private Education Loans

Navient offers private education loans to students and parents to help them cover education-related expenses.

Business Processing Outsourcing (BPO) Services

Navient provides BPO services to education lenders, helping them manage their loan portfolios and customer relationships.

Asset Recovery

Navient helps education lenders recover defaulted loans, reducing losses and improving their financial performance.

Default Aversion

Navient's default aversion services help borrowers avoid defaulting on their loans, reducing delinquencies and defaults.

8. Navient Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Navient Corporation operates in a highly competitive industry, and there are many substitutes available to customers. However, the company's strong brand recognition and diversified product offerings mitigate the threat of substitutes to some extent.

Bargaining Power Of Customers

Navient Corporation's customers have limited bargaining power due to the company's strong market position and diversified product offerings. Additionally, the company's large customer base and lack of concentration of customers also reduce the bargaining power of customers.

Bargaining Power Of Suppliers

Navient Corporation has a diversified supplier base, which reduces the bargaining power of suppliers. Additionally, the company's large scale of operations and strong financial position also reduce the bargaining power of suppliers.

Threat Of New Entrants

The threat of new entrants in the industry is low due to the high barriers to entry, including regulatory hurdles and the need for significant capital investment. Navient Corporation's strong brand recognition and established market position also make it difficult for new entrants to gain traction.

Intensity Of Rivalry

The intensity of rivalry in the industry is high due to the presence of many competitors and the highly competitive nature of the industry. Navient Corporation faces intense competition from other companies, which can lead to pricing pressure and reduced market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 95.44%
Debt Cost 8.36%
Equity Weight 4.56%
Equity Cost 10.93%
WACC 8.48%
Leverage 2091.00%

11. Quality Control: Navient Corporation passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Runway Growth Finance

A-Score: 7.7/10

Value: 7.5

Growth: 8.3

Quality: 7.0

Yield: 10.0

Momentum: 4.0

Volatility: 9.3

1-Year Total Return ->

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Medallion Financial

A-Score: 7.0/10

Value: 8.9

Growth: 7.7

Quality: 5.6

Yield: 7.0

Momentum: 7.0

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
Regional Management

A-Score: 6.5/10

Value: 7.7

Growth: 6.8

Quality: 5.4

Yield: 6.0

Momentum: 7.5

Volatility: 5.3

1-Year Total Return ->

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Stock-Card
Navient

A-Score: 6.3/10

Value: 9.6

Growth: 5.0

Quality: 5.6

Yield: 8.0

Momentum: 3.0

Volatility: 6.3

1-Year Total Return ->

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Stock-Card
Farmer Mac

A-Score: 6.1/10

Value: 6.2

Growth: 8.3

Quality: 4.6

Yield: 7.0

Momentum: 3.0

Volatility: 7.7

1-Year Total Return ->

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Oaktree Specialty Lending

A-Score: 5.8/10

Value: 5.6

Growth: 2.7

Quality: 5.5

Yield: 10.0

Momentum: 1.5

Volatility: 9.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

12.45$

Current Price

12.45$

Potential

-0.00%

Expected Cash-Flows