NAV - Navistar - Company Description

Navistar International Corporation, through its subsidiaries, manufactures and sells commercial and military trucks, diesel engines, school and commercial buses, and service parts for trucks and diesel engines worldwide. The company operates through four segments: Truck, Parts, Global Operations, and Financial Services. It manufactures and distributes Class 4 through 8 trucks and buses in the common carrier, private carrier, government, leasing, construction, energy/petroleum, military vehicle, and student and commercial transportation markets under the International and IC brands; and designs, engineers, and produces sheet metal components, including truck cabs and engines. The company also provides customers with proprietary products needed to support the International commercial and military truck, IC bus, and engine lines, as well as other product lines; and a selection of other standard truck, trailer, and engine aftermarket parts. In addition, it manufactures and distributes mid-range diesel engines, as well as provides customers with additional engine offerings in the agriculture, marine, genset, and light truck markets; sells engines to original equipment manufacturers (OEM) for various on-and-off-road applications; and offers contract manufacturing services under the MWM brand to OEMs for the assembly of their engines. Further, the company provides retail, wholesale, and lease financing of products of its trucks and parts, as well as financing for wholesale and retail accounts receivable. It markets its commercial products through an independent dealer network, as well as through distribution and service network retail outlets; and its reconditioned used trucks to owner-operators and fleet buyers through its network of used truck dealers. As of October 31, 2018, it had approximately 727 outlets in the United States and Canada, and 89 outlets in Mexico. Navistar International Corporation was founded in 1902 and is headquartered in Lisle, Illinois. Company description from FinViz.com.

Navistar (NAV) reported earnings of 11 cents that missed estimates for 15 cents but that was considerably better than the 74-cent loss in the year ago quarter. Revenue of $2.4 billion rose a whopping 28% and beat estimates for $2.2 billion. The company blamed the earnings miss on one-time pension expenses. Orders rose 26% year over year in Q4 compared to a 35% decline for the rest of the industry. They currently have orders for 53,700 trucks and busses. They produced 71,400 in 2018. That is a lot of big rigs! They raised revenue guidance for 2019 to $11 billion with $875 million in Ebitda. They expect to have a 19% market share.

I said in the Option Investor commentary this weekend that I would recommend the stock when it found a bottom. With options so cheap and initial support at $32.50, I am going to recommend a long-term position today. If you are concerned about a continued decline you can add the April $30 put as insurance.

Buy Jan $40 Call, currently $3.50, stop loss $28.85.
Optional: Buy April $30 Put, currently .65, no stop loss.