Entering text into the input field will update the search result below

Navient: Potential Bubble Or Potential Profit?

Oct. 03, 2018 11:23 AM ET1 Comment


  • Navient's value has reached levels worthy of consideration.
  • A robust loan portfolio and cash flow will continue to support the dividend.
  • Their stock repurchase plan will continue to support share prices.

Navient Corporation (NAVI), widely known as a student loan servicer, carries a strong dividend and may be a solid equity play to boot. Navient's stock price has remained rather stagnant for the last few years, as its portfolio of student loans has been in run-off mode and earnings have declined, however planned portfolio and services expansions may be the catalyst to lift Navient's stock price.

Big Money Operation, Declining Portfolio

Navient, a 2014 spin-off of Sallie Mae, provides asset management and business processing services to education, health care, and government clients at the federal, state, and local levels in the United States. The company operates in three segments: Federal Family Education Loan Program (FFELP) Loans, Private Education Loans, and Business Services. It holds the largest private sector portfolio of education loans ($77 billion) insured or guaranteed under FFELP, as well as the largest portfolio of private education loans ($23 billion), and originates private education refinance loans. Further, the company provides portfolio servicing, asset recovery and other business processing services via its Business Services segment.

FFELP loans represent the bulk of Navient's portfolio and it services even more federal loans, thus its main competitors are federal student loan servicers. After Nelnet's recent acquisition of Great Lakes Educational Loan Services, the three largest federal loan services are Nelnet, AES/FedLoan Servicing and Navient. Nelnet is public, AES is not. As of Sept 30, 2017, Navient had a 21% market share (Figure 1).

Figure 1: Market share of federal student loan loans by servicer, based on dollars outstanding

Federal education loan portfolios held by the "big three" are in run-off mode (amortizing) given that FFELP was discontinued in 2010 and all new federal loans are held by the Department of Education (ED). However, the ED assigns servicing rights for new loans to third party servicers. Servicing contracts with the ED are in

This article was written by

Andrew Almeida is the founder and CEO of Almeida Investment Management (AIM). He holds the Chartered Finacial Analyst designation and is also a Certified Financial Planner. By offering financial planning and investment management as one service, AIM delivers a model that is truly comprehensive and personalized for each client.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.