Navistar International Corp. (NAV) is scheduled to report earnings before the opening bell Wednesday.
NAV shares are up over 1% in 2014, but the ride has not been a smooth one: the stock traded below $30 in February only to rise to above $38 in March. Then in April the stock fell back below $32 only to retrace above $38 again in May, only to fall below $33 again that same month. The stock has traded in a 52-week range of $29.08-$41.57.
Big Player
Regulatory filings earlier this month showed Carl Icahn added to his Navistar stake earlier this month, causing the stock to rise several dollars.
Looking Back
Historically, NAV shares have moved a mean of 8.5% over the past 8 quarters on the earnings catalyst, rising 2 of the past 4 quarters and 5 of the past 8 quarters. Mid-market for this week’s NAV Sep Weekly 38 Straddle expiring Friday is $2.45, implying a move of about 6.5%. Analysts are calling for negative $0.66 EPS on $2.96 B in revenue.
Trade Idea
Given the low expectations, it wouldn’t be entirely surprising to see some positive news on the earnings call to send shares back towards $40 or beyond. The NAV Sep Weekly 38.5-39 Call Spread offers earnings speculators a 2:1 return on their money.
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