Despite Slowdown, Navistar Finds Fans

Major stock indexes have struggled this summer, but investors have found a few ideas worth getting excited about--such as truck maker Navistar International.

The company’s shares (ticker symbol: NAV) jumped $1.21 to $36.35 Wednesday on the New York Stock Exchange, highest since October, even as the firm reported a 98% drop in third-quarter profit.

Analysts said the results still were better than expected. Also, Navistar said it hopes further cost-cutting will enable it to show a profit for the year.

Net earnings for the quarter ended July 31 totaled $2 million, or 3 cents a share, down from $96 million, or $1.60 a share, a year earlier. Analysts surveyed by Thomson Financial/First Call had estimated a 1 cent-per-share profit.

Sales fell 18% to $1.59 billion.

John Horne, chief executive of the Chicago-based maker of trucks, school buses and diesel engines, said the company has been producing below retail demand for a year to reduce dealer inventories and is seeing improvements in the form of better margins and low inventory.

Navistar shipped 20,600 trucks and school buses in the quarter, compared with 27,600 a year earlier.

“While we cannot control market conditions, we can control how we respond and we can continue to take costs out of our operations and manage our production schedules so that we will be a stronger company when the market turns up,” Horne said.

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Still Truckin’

Navistar International’s shares have surged this summer as some investors have bet that cost cuts at the truck maker will allow the firm to return to profitability soon.

Navistar shares, weekly closes and latest

Wednesday: $36.35, up $1.21

Source: Bloomberg News