Nelnet (NNI) AI Stock Analysis

• Market Cap: $3.85B
• Dividend Yield: 1.05%
• Average Volume (3M): 61.02K
• Price to Earnings (P/E): 21.7
• Beta (1Y): 0.65
• Revenue Growth: -0.43%
• EPS Growth: 105.05%
• Country: US
• Employees: 6,739
• Sector: Financial
• Sector Strength: 83
• Industry: Financial - Credit Services
• EPS (TTM): 4.90
• Shares Outstanding: 25,703,360
• 10 Day Avg. Volume: 47,993
• 30 Day Avg. Volume: 61,017
• PEG Ratio: 0.21
• Price to Book (P/B): N/A
• Price to Sales (P/S): 13.07
• Price to Cash Flow (P/CF): 5.60
• P/FCF Ratio: 1.40
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $115.00
• Price Target Upside: 8.74% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 1

Nelnet's strong financial performance, marked by improved profitability and effective cash management, is a key strength. However, technical indicators suggest a bearish trend and weak market momentum, which could hinder short-term stock performance. The valuation appears fair but does not provide a strong incentive for investment. The absence of significant earnings call and corporate events data makes the financial performance and technical analysis the primary factors affecting the score.

Positive Factors

Cost Management

The increase in the core loan spread was primarily driven by a decline in the cost of funds, with the majority of consumer loans financed with operating cash, reducing funding cost.

Financial Performance

The quarter is viewed as positive, driven by strong servicing revenue, better net interest margin, and lower-than-expected expenses.

Revenue Growth

Revenue should continue to grow, driven by margin improvement and the new SoFi servicing.

Negative Factors

Defaults and Impairments

NNI experienced higher defaults within some of these securitizations, leading to a recorded impairment of $29mm.

Expense Management

Management expects a reduction in such expenses moving forward after incurring a significant portion of these expenses this quarter.

Investment Losses

NNI recorded $11.3mm net losses from tax equity solar investments.

Nelnet Business Overview & Revenue Model

Company Description

Nelnet, Inc. (NNI) is a publicly traded company headquartered in Lincoln, Nebraska, primarily operating in the education services, loan servicing, and financial services sectors. The company offers a diverse range of products and services, including student loan servicing, payment processing, education planning, and asset management. Nelnet is committed to providing innovative solutions that enhance the educational experience and financial well-being of its clients, which include students, educational institutions, and financial entities.

How the Company Makes Money

Nelnet generates revenue through several key streams. The primary source is its loan servicing segment, where it manages and services a large portfolio of federal student loans on behalf of the U.S. Department of Education. This includes earning fees for loan servicing activities such as payment processing and customer service. Additionally, Nelnet earns revenue through its payment processing solutions, which facilitate transactions for educational institutions, and its education technology services that offer planning and financial management tools for students and families. The company also invests in various ventures and holds a portfolio of real estate and renewable energy investments, contributing to its earnings. Strategic partnerships with educational institutions and financial organizations further bolster its revenue streams.

Nelnet Financial Statement Overview

Summary

Nelnet demonstrated resilience in 2024 despite a revenue decline, with improved profitability and cash flow metrics. The company exhibited strong cost control measures, resulting in higher net income. Leverage ratios improved, indicating better balance sheet management. However, the absence of EBIT and EBITDA data for 2024 limits a full evaluation of operational efficiency. Overall, the company appears to be on a stable financial footing with effective cash flow management, though long-term asset growth remains a concern.

Income Statement

Nelnet showed a significant decline in total revenue from 2023 to 2024, with a decrease from $2.13 billion to $1.17 billion. However, despite the revenue drop, the net income improved substantially from $91.53 million in 2023 to $184.05 million in 2024, indicating effective cost control and operational efficiency. The gross profit margin remained strong at 100% in 2024 due to the absence of cost of goods sold, typical for the finance industry. EBIT and EBITDA figures were not reported for 2024, limiting detailed profitability analysis.

Balance Sheet

The company's debt-to-equity ratio decreased from 3.56 in 2023 to 2.48 in 2024, suggesting improved leverage management. Stockholders' equity increased slightly, and the equity ratio improved from 19.49% to 24.31%, reflecting enhanced financial stability. However, total assets declined, which may affect long-term growth potential.

Cash Flow

Nelnet's free cash flow grew significantly from $358.92 million in 2023 to $641.99 million in 2024, indicating robust cash generation capacity. Operating cash flow increased sharply, and the operating cash flow to net income ratio improved, showcasing efficient cash management. The free cash flow to net income ratio also strengthened, highlighting strong cash conversion.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
1.17B	2.13B	1.41B	1.23B	1.06B
	Gross Profit
1.17B	585.03M	816.28M	725.25M	559.25M
	EBIT
0.00	943.60M	950.71M	509.11M	453.30M
	EBITDA
0.00	1.02B	1.01B	775.12M	923.98M
	Net Income Common Stockholders
184.04M	91.53M	407.35M	393.29M	352.44M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.18B	1.03B	2.14B	2.64B	1.46B
	Total Assets
13.78B	16.74B	19.37B	21.68B	22.65B
	Total Debt
8.31B	11.62B	14.64B	17.63B	19.32B
	Net Debt
8.12B	11.45B	12.41B	15.92B	18.21B
	Total Liabilities
10.48B	13.51B	16.17B	18.73B	20.02B
	Stockholders Equity
3.35B	3.26B	3.20B	2.95B	2.63B
Cash Flow		Free Cash Flow
641.99M	358.92M	624.64M	485.92M	99.50M
	Operating Cash Flow
662.89M	432.98M	684.06M	544.87M	212.81M
	Investing Cash Flow
2.41B	1.94B	2.27B	1.19B	621.22M
	Financing Cash Flow
-3.17B	-2.70B	-2.79B	-1.49B	-1.10B

Nelnet Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 105.76
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NNI, the sentiment is Negative. The current price of 105.76 is below the 20-day moving average (MA) of 106.19, below the 50-day MA of 111.21, and below the 200-day MA of 110.13, indicating a bearish trend. The MACD of -1.49 indicates Negative momentum. The RSI at 45.68 is Neutral, neither overbought nor oversold. The STOCH value of 55.73 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NNI.

Nelnet Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ENVA	78 Outperform	$2.52B	13.16	17.19%	―	25.51%	36.96%
WU	72 Outperform	$3.35B	3.78	136.84%	9.23%	-5.16%	59.60%
OMF	69 Neutral	$5.15B	10.18	15.96%	8.54%	7.96%	-20.11%
SLM	66 Neutral	$5.85B	10.49	30.11%	1.70%	4.90%	11.33%
NNI	64 Neutral	$3.85B	21.72	5.45%	1.05%	-0.43%	105.05%
Sector *	63 Neutral	$12.32B	9.52	7.97%	79.23%	12.77%	-4.57%
UPST	52 Neutral	$4.44B	―	-20.27%	―	24.50%	49.38%

Nelnet Corporate Events

Nelnet Bank Reports Financial Status to FDIC

On January 30, 2025, Nelnet Bank submitted its Consolidated Reports of Condition and Income to the FDIC for the quarter ending December 31, 2024. This filing is part of regulatory compliance and provides insights into the bank’s financial status, although the information is not intended for securities filings.