Please ensure Javascript is enabled for purposes of website accessibility

Instant Analysis: Navistar CEO Willing to Consider Deals

By Eric Volkman - Mar 7, 2016 at 9:04AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company has struggled with revenue erosion and a lack of profitability.

What happened?
Truck and engine maker Navistar International (NAV) might be trucking down the road to a sale. CEO Troy Clarke implied strongly in an interview with Reuters that the company was open to a partnership with, or even acquisition by, another manufacturer.

IMAGE SOURCE: NAVISTAR. 

Referring to the company's recent agreement with General Motors to produce medium-duty trucks for the incumbent car giant, Clarke said that "there are companies out there that could use our ability to do that kind of stuff to grow their footprint in North America."

Like its peers, Navistar has been struggling with a general slowdown in sales of the types of vehicles it specializes in. It posted lower revenues on a year-over-year basis as well as a net loss in its recently reported fiscal 2015.

Does it matter?
At this point for Navistar, a sell-off or major partnership is a good idea. Although at this early stage, it's hard to gauge what direction -- if any -- the company might go in, it could obviously use the help. That annual net loss was its fourth in a row, and although it has done a decent job of cutting costs, its revenue is also eroding (the 2015 tally was its lowest in years).

Besides, Navistar's major shareholder roster has a big name at the top -- Icahn Enterprises' leader and namesake, activist investor Carl Icahn. Icahn Enterprises and its ilk would surely welcome an acquisition -- after all, Icahn once described the company as "a poster child for abysmal business decisions and poor corporate governance" in an open letter.

That was before the current managerial regime, which has done what it can to shore up the business. But times are still tough, and it's getting harder to go it alone. Sentiment on Navistar should improve with Clarke's statements, but the company has a long road to travel if it's going to survive and thrive.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Navistar International Corporation Stock Quote
Navistar International Corporation
NAV

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.