Water-Logged And Getting Wetter: Navient (NAVI)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Navient ( NAVI) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Navient as such a stock due to the following factors:

  • NAVI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $42.9 million.
  • NAVI has traded 1.4 million shares today.
  • NAVI traded in a range 217.5% of the normal price range with a price range of $0.72.
  • NAVI traded below its daily resistance level (quality: 64 days, meaning that the stock is crossing a resistance level set by the last 64 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on NAVI:

Navient Corporation provides financial products and services in the United States. The company operates in four segments: FFELP Loans, Private Education Loans, Business Services, and Other. The stock currently has a dividend yield of 3.2%. NAVI has a PE ratio of 7. Currently there are 3 analysts that rate Navient a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Navient has been 2.4 million shares per day over the past 30 days. Navient has a market cap of $7.7 billion and is part of the financial sector and financial services industry. Shares are down 8.4% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Navient as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, notable return on equity, attractive valuation levels and expanding profit margins. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Consumer Finance industry. The net income increased by 33.3% when compared to the same quarter one year prior, rising from $219.00 million to $292.00 million.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Consumer Finance industry and the overall market, NAVIENT CORP's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • The gross profit margin for NAVIENT CORP is currently very high, coming in at 72.08%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 22.90% is above that of the industry average.

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