Navistar (NYSE: NAV) missed earnings! Horrors! Its earnings fell 10% short of expectations! Disaster!

Settle down, Fool. I know you're disappointed, but really -- the quarter wasn't half bad. Not nearly as bad as you might think from the 3% haircut investors are giving Navistar's stock price today.

The bad
Admittedly, today's bad news raised eyebrows. Fourth-quarter earnings dropped 55% in comparison to last year's fourth quarter. Full-year profits dropped 32%, as Navistar ended the year earning only $3.05 per share. And yes, revenue growth was anemic at just 5% for the year; it's also disheartening to see Navistar end on a low note, with Q4 sales rising at slower 2% pace. Yet, all is not lost.

The good
Lost in the misery and malaise of analyst commentary today is the fact that Navistar actually did better than many folks thought it would. For example, pre-earnings, analysts were telling us to expect a 2.5% revenue decline. Instead, Navistar's revs grew, beating the consensus forecast by nearly 5%. As for earnings ... yes, they were down; there's no denying that -- but the reason they dropped is the real news: Navistar inked a new four-year contract with the UAW, which cost it $0.14 per share in Q4 profit -- but secures the company against similar labor-cost surprises for the next four years, and gives the company a contented workforce as it moves into 2011.

Also noteworthy: The very real possibility that Navistar is going to blow all these numbers away next year.

The opposite of ugly
I admit, I first discovered Navistar through its role as a competitor to Force Protection (Nasdaq: FRPT), Oshkosh (NYSE: OSK), and General Dynamics (NYSE: GD) in the market for military MRAP trucks. But the longer I watch the company, the more I realize its greatest potential may come from less warlike endeavors.

CEO Daniel Ustian tells us that "the North American truck market has been depressed for three years." But going forward, Ustian expects to generate "solid returns to our bottom line in 2012 and 2013." Why? Because as I described last month, North American trucking is about to take its foot off the brake, as ancient trucking fleets turn over, and truckers like Heartland Express (Nasdaq: HTLD) and Con-way (NYSE: CNW) make good on their promises to buy newer, more fuel-efficient, less accident-prone rigs.

Analysts expect this trucking renaissance to keep Navistar's profits growing at an annualized 9.3% pace over the next five years. With Navistar stock currently selling for less than five times free cash flow, I think that rate's plenty fast to justify owning the shares at today's prices.

The Fool owns shares of Oshkosh, but Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.

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