What happened
Wednesday was not a good day to be a Navient (NAVI +5.85%) shareholder. The student loan specialist's stock took a nearly 10% dive due to a fresh set of quarterly results that missed important marks.
So what
For its third quarter, Navient's total revenue came in at $148 million, which was down notably from the $212 million in the same period of 2021. The company's "core," -- i.e., non-GAAP (adjusted) -- net income suffered a steeper fall, declining to $87 million ($0.75) from the year-ago quarter's $149 million.
The negative investor reaction to this was understandable, as analysts were expecting a much meatier top-line result. On average, they were modeling over $366 million in revenue. The miss was much narrower on the bottom line, as collectively those prognosticators had estimated $0.79 per share for net income.
Navient attributed the decline in key fundamentals to several factors, chiefly rising interest rates (which make loans more expensive), and the government's recently announced student loan forgiveness program.
The news wasn't all bad for the lender during the quarter. It didn't hesitate to point out that it grew its in-school loan originations by 40%.
NASDAQ: NAVI
Key Data Points
Now what
While Navient didn't provide any guidance for future periods in its earnings release, it did quote CEO Jack Remondi as saying that "we remain defensively positioned given our outlook for more challenging economic conditions."
This likely contributed to the investor sell-off, as companies facing growth rarely speak of being "defensively positioned" or warn clearly about tougher times ahead. These aren't the best times to be a lender of any type, and the student loans segment is a particularly cold area just now.
