Navistar International CorpNAV

Morningstar Rating

Stock Research and Analysis

by Basili Alukos, CPA

Truck manufacturer Navistar operates in an extremely cyclical industry, and its success is likely to hinge on growth and profitability in its other product offerings.

From its beginnings more than 150 years ago, Navistar has evolved into a significant Read more

Bulls Say

With the introduction of LoneStar, Navistar is entering the premium sector of Class 8 trucks. If this brand gains traction, it could help Navistar double its market share in this sector while increasing revenue substantially.

Despite a tumultuous economy, Navistar's 2008 backlog was 13% higher versus the same time last year, which could boost sales at a time when industrywide volume is suffering.

Navistar entered into a second joint venture with Mahindra & Mahindra, an Indian company that accounts for roughly half of the country's market for utility vehicles. This international exposure should help increase sales and mitigate country-specific slowdowns. Read more

Bears Say

Unionized labor, which represents almost 50% of the firm's active labor force, stopped work for three months during 2007. Recurring work stoppages could lead to lost business and increased salaries to settle any disagreements, hurting profitability.

Since Navistar finances almost all its inventory it sells to its dealers and distributors, the deleveraging in the financial industry could significantly depress results and hurt truck sales.

Because of a recent legal settlement, Navistar will no longer sell engines to Ford after 2011, leaving the firm with roughly a 10% revenue shortfall. Read more

Strategy

Navistar has a three-pronged approach for its long-term success. The firm plans to continue expanding its product offering while advancing its engine technologies in new markets. In addition, Navistar Read more

Management

Chairman and CEO Daniel Ustian started with Navistar in 1973, where he worked his way up to his current role in 2003. During his tenure, Ustian was instrumental in negotiating a 12-year agreement to produce diesel engines for Ford Motor Company F. Insider Read more

Profile

Navistar Corporation is a leading manufacture of International brand commercial trucks, buses, diesel engines, chassis, and military vehicles. In addition, the firm provides Read more

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