What happened

Student loan servicing and origination company Navient (NASDAQ:NAVI) just released its fourth-quarter 2019 earnings, and it appears that investors are pleased with the results. As of 10:30 a.m. EST on the morning after the Tuesday-afternoon release, the stock was up by nearly 10%.

Navient surprised analysts with an earnings increase. The company reported core adjusted EPS of $0.67 per share, handily surpassing the $0.57 analysts had been looking for and higher than the $0.58 per share Navient produced in the same quarter a year ago.

Graduation cap on top of money.

Image source: Getty Images.

So what

Digging a little deeper, we can see that Navient's results look quite strong all around. A few of the highlights from the company's earnings report:

  • Adjusted EPS climbed by 26% in 2019, as compared with 2018.
  • Navient's federal loan (FFELP) charge-offs fell by 31% in the fourth quarter year over year, and private student loan delinquencies declined by 22%. Provisions for loan losses fell by 42% as a result of the strong portfolio performance.
  • Navient originated $1.6 billion of private student loans, more than double what it originated in the same quarter a year ago. During 2019, Navient originated almost $5 billion in private loans to 72,000 borrowers.
  • Navient's net interest margins increased by 1 basis point in the federal lending segment and by 13 basis points in the consumer lending (private student loan) segment, despite the general falling-rate environment in 2019.

Now what

Navient's earnings certainly look strong, but the company's future is very much up in the air. Student loans are a hot-button issue heading into the 2020 election, and with Navient shares trading at less than 6 times TTM earnings even after the post-earnings pop, the uncertainty is very much reflected in the stock's price.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.