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Rating Change Detail - NAVISTAR INTERNATIONAL CORPORATION (NAV) - 3/10/2010
The stock was downgraded from Some Interest to No Interest on 3/10/2010 by the P/E/Growth Investor Strategy based on the principles of Peter Lynch. The score according to this strategy fell from 76% to 0%. A full detailed analysis of NAV using this strategy is included below. For a full detailed analysis of NAV using 12 proven strategies of Wall Street Legends, take a free trial to Validea.com

Detailed Analysis of NAVISTAR INTERNATIONAL CORPORATION (NAV)

Strategy: P/E/Growth Investor - Based on: Peter Lynch

DETERMINE THE CLASSIFICATION:

NAV is considered a "True Stalwart", according to this methodology, as its earnings growth of 10.83% lies within a moderate 10%-19% range and its annual sales of $11,408 million are greater than the multi billion dollar level. This methodology looks for the "Stalwart" securities to gain 30%-50% in value over a two year period if they can be purchased at an attractive price based on the P/E to Growth ratio. NAV is attractive if NAV can hold its own during a recession.

INVENTORY TO SALES: [PASS]

When inventories increase faster than sales, it is a red flag. However an increase of up to 5% is considered bearable if all other ratios appear attractive. Inventory to sales for NAV was 11.06% last year, while for this year it is 14.40%. Since inventory has been rising, this methodology would not look favorably at the stock but would not completely eliminate it from consideration as the inventory increase (3.34%) is below 5%.

YIELD ADJUSTED P/E TO GROWTH (PEG) RATIO: [FAIL]

The Yield-adjusted P/E/G ratio for NAV (3.78), based on the average of the 3 and 4 year historical eps growth rates, is unacceptable for a "Stalwart". This criteria is the most important one in the methodology and a failure of it will automatically result in a 0% score for the overall analysis.

EARNINGS PER SHARE: [PASS]

The EPS for a stalwart company must be positive. NAV's EPS ($1.08) would satisfy this criterion.

TOTAL DEBT/EQUITY RATIO: [FAIL]

Unfortunately, the Debt/Equity ratio for NAV is not currently available. Hence, an opinion cannot be rendered on this criterion at the present time.

FREE CASH FLOW: [BONUS PASS]

The Free Cash Flow/Price ratio, though not a requirement, is considered a bonus if it above 35%. A positive Cash Flow (the higher the better) separates a wonderfully reliable investment from a shaky one. This methodology prefers not to invest in companies that rely heavily on capital spending. This ratio for NAV (36.11%) is high enough to add to the attractiveness of the stock.

NET CASH POSITION: [NEUTRAL]

Another bonus for a company is having a Net Cash/Price ratio above 30%. Lynch defines net cash as cash and marketable securities minus long term debt. According to this methodology, a high value for this ratio dramatically cuts down on the risk of the security. The Net Cash/Price ratio for NAV (-80.01%) is too low to add to the attractiveness of this company. Keep in mind, however, that it does not adversely affect the company as it is a bonus criteria.

For a full detailed analysis of NAV using 12 proven strategies of Wall Street Legends,
take a free trial to Validea.com

Rating Change Detail - NAVISTAR INTERNATIONAL CORPORATION (NAV) - 3/10/2010

Detailed Analysis of NAVISTAR INTERNATIONAL CORPORATION (NAV)

Strategy: P/E/Growth Investor - Based on: Peter Lynch