Navigant (NCI) Up 1.8% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Navigant (NCI). Shares have added about 1.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Navigant due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Navigant Beats Earnings and Revenue Estimates in Q1
Navigant Consulting's first-quarter 2019 adjusted earnings per share (from continuing operations) of 18 cents surpassed the Zacks Consensus Estimate by 10 cents and came ahead of the year-ago figure by 15 cents. The bottom line benefited from strong operating performance, higher net interest income, lower depreciation and amortization and lower share count in the current year period.
Total revenues of $202.9 million increased 13.9% from the prior-year quarter. Revenues before reimbursements (RBR) of $186.1 million beat the consensus estimate by $7.2 million and improved 15.3% year over year. The top line benefited from solid growth in managed services business (led by the contribution from the Health System Solutions (HSS) joint venture), continued solid demand in the Energy segment and robust growth in healthcare consulting services. These were, however, partially offset by lower RBR within the Financial Services Advisory and Compliance (FSAC) segment.
Revenues by Segments
Healthcare segment’s RBR of $119 million increased 32.1% year over year, driven by demand recovery for healthcare consulting services and solid contributions from the HSS joint venture. Energy segment’s RBR of $36.2 million increased 7.4% year over year on the back of continued solid demand for Energy expertise from both commercial and government clients. Financial Services Advisory and Compliance’s (“FSAC”) RBR of $30.9 million decreased 17.8% year over year due to slowdown of a large monitorship engagement, expenses arising from some larger banking clients and continued start-up delays on certain new engagements.
EBITDA Performance
Adjusted EBITDA from continuing operations in the first quarter of 2019 came in at $16.3 million compared with $9.2 million in the prior-year quarter. The upside was driven by robust performance of the HSS joint venture, solid year-over-year utilization and margin improvement in healthcare consulting and lower bad debt expense, which were, however, partially offset by lower performance of the FSAC segment.
Balance Sheet and Cash Flow
Navigant exited first-quarter 2019 with cash and cash equivalents of $107.22 million compared with $206.92 million at the end of the prior quarter. The company used $31.1 million of net cash in operating activities in the reported quarter. Adjusted free cash flow was $17.9 million. Capital expenditures were $3 million.
Share Repurchases & Dividend Payment
During first-quarter 2019, Navigant repurchased 2.3 million shares at an aggregate cost of $53.5 million and average price of $23.09 per share. As of Mar 31, 2019, the company had roughly $24.7 million remaining for share repurchases under the board authorization effective May 7, 2018 On Apr 18, 2019, the company’s board of directors extended its existing share repurchase program with an approved limit of $175 million through Dec 31, 2021, effective from May 1, 2019. The company paid $1.99 million in dividend payments in the reported quarter.
2019 Guidance
Navigant reaffirmed its guidance for 2019. It expects revenues to be $810-$840 million. RBR is expected to be between $735 million and $765 million. Adjusted earnings per share are expected to be between 85 cents and $1.00. Adjusted EBITDA is anticipated to be $70-$80 million. Adjusted free cash flow is anticipated between $43 million and $53 million. Capital expenditure is estimated to be around $20 million.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months.
VGM Scores
At this time, Navigant has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Navigant has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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