Novice Investing - Can Navistar Shine?

Date: Thursday 20th 2008f November 2008 04:05:23 PM

Can Navistar Shine? - 11/29/2005

By: Novice Investing Staff

Navistar International Corp. (NAV) came to our attention from simple stock screening. If all goes well, Navistar can be our next sample portfolio pick. But, don't break out the champagne just yet. As with all screening, not all will get selected. Navistar may be one of those companies.

A little bit introduction, Navistar International manufactures midsize trucks and buses. Company that is most similar to Navistar is Bellevue based Paccar Inc. (PCAR). While the like of General Motor and Ford focuses on consumer vehicle, Navistar focuses on business owners and transportation companies.

As you may know by now, both GM and Ford are struggling to control their cost against the Japanese automakers. Furthermore, their balance sheet is saddled with heavy debt load. How about Navistar? It spotted a cash equivalents of $ 1.3 Billion, $ 2.1 Billion of long term investment and $ 2.7 Billion of long term debt. Overall, Navistar has a positive net cash of $ 700 Million or $ 9.97 per share. Please note that this might not be an accurate picture of Navistar's financial strength due to the fact that Navistar has certain portion of its business in a finance business. For 2004, 3 % of total sales is generated this way.

Navistar clearly has a manageable debt load. In fact, it can pay off its debt right away if it wants to. Furthermore, it is expected to post a profit for fiscal year 2005 and 2006. For fiscal year 2005, it is expected to post a profit of $ 4.84 per share, while estimates for year 2006 is even higher.

Navistar looks pretty cheap at current price. Using a 2005 earning figure and assume a 0 % growth going forward, Navistar business is fairly valued at $ 64.8 per share. This is a lot more than today's stock price of $ 28.30. On this basis, things look promising. We will try to whip out our calculators and predict fair value of Navistar's common stock within the next few days. By then, we might know if Navistar is a good candidate for our sample portfolio pick.

END

For preliminary research, you can browse our collection of annual reports here

You can also view other helpful commentary by clicking here

Disclaimer: The sole purpose of this article is educational. This article is merely the opinion of the writer and is not in any way a buy/sell recommendation regarding Navistar International Corp. (NAV) or any other securities.

[Resources] [Forum] [Link Partner ] [Novice Investing Directory ] [ Submit Your Article Here ]