Navistar (NYSE:NAV) will release its quarterly report on Wednesday, and investors don't expect good news from the trucking giant. Yet even if Navistar earnings continue to look as bad as they have in recent quarters, relief might not be too far away for beleaguered investors.

Navistar is the company behind a wide variety of industrial vehicles, including trucks for both commercial and military use as well as school buses and recreational vehicles. It also produces diesel engines for vehicles. Yet troubles in meeting regulatory guidelines has led to some huge disruptions in Navistar's business, and even with a solution in place, the company could continue to struggle for a while longer. Let's take an early look at what's been happening with Navistar over the past quarter and what we're likely to see in its report.

Stats on Navistar

Analyst EPS Estimate


Year-Ago EPS


Revenue Estimate

$2.92 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will Navistar earnings ever go positive?
In recent months, analysts have gotten a lot more pessimistic about Navistar earnings prospects, nearly tripling their loss estimates both for the July quarter and for the full fiscal year. The stock hasn't done all that badly, though, falling just 5% since late May.

Navistar has been under pressure for a long time. Not only did the SEC have to investigate the company last year over alleged poor disclosure of its weak financial condition, but Navistar had to resort to making a deal with rival Cummins (NYSE:CMI) in order to obtain engine technology that would allow it to comply with EPA emissions standards. With new regulations coming in future years, Navistar faces the ongoing challenge of keeping up with higher standards.

Navistar hasn't been entirely locked out of the trucking market, though. The company won several contracts from the Defense Department in support of its military vehicles, including its MaxxPro mine-resistant, ambush-protected armored vehicle. On the commercial front, Navistar won part of an order in May from trucking company Con-Way (UNKNOWN:CNW.DL), which purchased 200 ProStar vehicles from the company. Still, the fact that rival Paccar (NASDAQ:PCAR) got an even bigger portion of the Con-Way order is just one more sign of the ongoing struggles Navistar faces.

Still, the big challenge Navistar faces is the pace at which its rivals have moved forward. Cummins in particular has worked on pioneering natural-gas-fired engines, which could help the trucking industry take advantage of lower nat-gas prices to fuel a new revolution in freight transportation. Westport Innovations (NASDAQ:WPRT) has also worked hard, both in its joint venture with Cummins and independently, to support natural-gas engines, an area in which Navistar badly lags.

In the Navistar earnings report, watch for guidance on how well the company is doing at figuring out a long-range solution to its problems. With activist investor Carl Icahn on board, the potential for dramatic changes is ever-present and could provide the only solution to Navistar's long-term woes.

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