SLM (SLM) AI Stock Analysis

• Market Cap: $6.49B
• Dividend Yield: 1.71%
• Average Volume (3M): 1.88M
• Price to Earnings (P/E): 15.7
• Beta (1Y): 1.06
• Revenue Growth: -4.34%
• EPS Growth: -38.01%
• Country: US
• Employees: 1,710
• Sector: Financial
• Sector Strength: 70
• Industry: Financial - Credit Services
• EPS (TTM): 0.32
• Shares Outstanding: 208,481,380
• 10 Day Avg. Volume: 1,564,230
• 30 Day Avg. Volume: 1,876,710
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.45
• Enterprise Value/Revenue: 3.28
• Enterprise Value/Gross Profit: 6.17
• Enterprise Value/Ebitda: 12.59
• 1Y Price Target: $38.33
• Price Target Upside: 25.92% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 10

• Rating: 58 Neutral
• Price Target: $32.00 ▲(5.12% Upside)

SLM's overall stock score reflects a mix of solid profitability and operational efficiency against challenges in revenue growth and cash flow. The earnings call provided positive insights on strategic opportunities, but technical indicators suggest bearish momentum. Valuation metrics indicate fair pricing, with moderate income potential from dividends.

Positive Factors

Capital Utilization

SLM sold $1.8bn of loans, freeing up nearly $400mm of capital, which is estimated to be used in buybacks, as the company has still $302mm authority remaining.

Market Opportunities

The anticipated discontinuation of Grad PLUS loans and caps on Parent PLUS loans is expected to create a $4.5B-$5.0B opportunity for SLM based on its current ~60% market share of private student loans.

Strategic Positioning

SLM's strong presence and market position should allow it to capture opportunities from the privatization of the Grad Plus program.

Negative Factors

Delinquency and Charge-offs

Delinquency rates as a percentage of total loans increased to 4.38%, up from last month's 3.89% and last year's 3.60%.

Earnings Performance

SLM reported core EPS below both JPMe and Street estimates, driven by higher than estimated provision expense.

Margin Pressure

Slight margin compression from balance sheet repricing is expected to partially offset strong loan growth.

SLM Business Overview & Revenue Model

Company Description

SLM Corporation, through its subsidiaries, originates and services private education loans to students and their families to finance the cost of their education in the United States. It also offers retail deposit accounts, including certificates of deposit, money market deposit accounts, and high-yield savings accounts; and omnibus accounts, as well as credit card loans. It serves students and families through financial aid, federal loans, and student and family resources. The company was formerly known as New BLC Corporation and changed its name to SLM Corporation in December 2013. SLM Corporation was founded in 1972 and is headquartered in Newark, Delaware.

How the Company Makes Money

SLM generates revenue primarily through the interest on private student loans, which are issued to students and parents to cover education-related expenses. The company also earns income from loan servicing fees, where it manages the repayment process for education loans. Additionally, SLM profits from ancillary services such as financial literacy resources and educational planning tools offered to students and families. Significant partnerships with educational institutions and financial organizations enhance SLM's reach in the student loan market, creating opportunities for cross-selling products and services. Overall, the combination of interest income, servicing fees, and strategic partnerships constitutes the key revenue streams for SLM.

SLM Financial Statement Overview

Summary

SLM's financials show strong profitability margins with a healthy gross profit margin of 52.8% and a robust EBIT margin of 30.5%. However, challenges are evident in negative revenue growth of -3.4% and concerning cash flow performance with negative operating cash flow. High leverage with a debt-to-equity ratio of 2.70 poses additional risks.

Income Statement

SLM shows a mixed performance in the income statement. The gross profit margin for TTM (Trailing-Twelve-Months) is healthy at 52.8%, indicating strong core profitability. However, net profit margin decreased to 15.2% from the previous year, suggesting some pressure on bottom-line profitability. Revenue growth is negative at -3.4% compared to the previous year, highlighting challenges in expanding sales. The EBIT margin stands at 30.5%, which is quite robust, while EBITDA margin is slightly higher at 33.8%, indicating efficient operating performance despite the revenue decline.

Balance Sheet

The balance sheet reflects a stable but leveraged position. The debt-to-equity ratio for TTM is 2.70, showing high leverage that could pose risks if revenue declines persist. However, return on equity (ROE) is solid at 18.4%, indicating efficient use of equity to generate profits. The equity ratio is relatively low at 8.0%, suggesting limited buffer against liabilities but could mean higher leverage benefits during profitable periods.

Cash Flow

Cash flow performance is concerning, with negative operating cash flow for the TTM at -$393.7 million, indicating cash outflows from core operations. The free cash flow to net income ratio is negative, reflecting challenges in converting profits to cash. Despite this, the operating cash flow to net income ratio is -0.90, which requires improvement to ensure better liquidity and operational cash generation.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.86B	2.62B	2.89B	2.37B	2.37B	2.29B
Gross Profit	1.52B	1.44B	1.46B	1.19B	2.06B	1.72B
EBITDA	746.19M	816.29M	796.11M	833.36M	1.56B	1.32B
Net Income	442.21M	608.33M	581.39M	469.01M	1.16B	880.69M
Balance Sheet
Total Assets	29.60B	30.07B	29.17B	28.81B	29.22B	30.77B
Cash, Cash Equivalents and Short-Term Investments	4.09B	4.70B	4.15B	6.96B	4.55B	6.45B
Total Debt	6.41B	6.44B	5.23B	5.24B	5.93B	5.19B
Total Liabilities	27.23B	27.91B	27.29B	27.08B	27.07B	28.21B
Stockholders Equity	2.37B	2.16B	1.88B	1.73B	2.15B	2.56B
Cash Flow
Free Cash Flow	-393.66M	-329.39M	-144.64M	4.99M	-49.52M	2.15B
Operating Cash Flow	-393.66M	-329.39M	-144.64M	4.99M	-49.52M	-182.67M
Investing Cash Flow	-1.08B	675.99M	-12.46M	1.08B	2.60B	947.33M
Financing Cash Flow	328.80M	228.16M	-316.23M	-854.89M	-2.62B	-1.88B

SLM Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 30.44
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SLM, the sentiment is Negative. The current price of 30.44 is below the 20-day moving average (MA) of 31.27, below the 50-day MA of 32.07, and above the 200-day MA of 29.74, indicating a neutral trend. The MACD of -0.26 indicates Positive momentum. The RSI at 42.07 is Neutral, neither overbought nor oversold. The STOCH value of 45.30 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SLM.

SLM Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
OMF	76 Outperform	$7.31B	11.12	20.47%	6.81%	9.41%	13.98%
NNI	74 Outperform	$4.66B	14.53	9.42%	0.90%	6.46%	116.26%
CACC	69 Neutral	$5.87B	15.07	27.30%	―	12.63%	149.03%
Sector *	68 Neutral	$17.80B	11.94	9.89%	3.74%	9.69%	1.17%
LC	67 Neutral	$1.90B	25.91	5.50%	―	7.54%	70.26%
NAVI	60 Neutral	$1.37B	42.27	1.28%	4.66%	-25.37%	-75.77%
SLM	58 Neutral	$6.49B	15.71	18.99%	1.71%	-4.34%	-38.01%

SLM Corporate Events

SLM Faces Impact from Federal Loan Reforms

SLM Corporation reported its financial results for the second quarter of 2025, highlighting a GAAP net income of $67 million and a net interest margin of 5.31%. The company experienced a slight decrease in private education loan originations compared to the previous year, with $686 million in Q2 2025. Additionally, the company faced an increase in provisions for credit losses due to macroeconomic factors and loan sale timing. The recent federal student loan reforms signed into law on July 4, 2025, are expected to impact the market by setting limits on parent and graduate lending, which may influence Sallie Mae’s operations and market strategy moving forward.

SLM Reports Q2 2025 Financial Performance Highlights

On August 11, 2025, SLM Corporation released two presentations on its website detailing its financial performance for the quarter ended June 30, 2025. The company reported a GAAP net income of $67 million and a diluted earnings per share of $0.32 for Q2 2025. Despite a slight decrease in private education loan originations compared to the previous year, SLM maintained a strong return on common equity of 12.6%. The company also highlighted its robust capital allocation strategy, including share repurchases and dividend payments, which are aimed at enhancing shareholder value. Additionally, SLM successfully settled its first student loan ABS transaction of the year, demonstrating strong investor demand despite market volatility.

SLM Stockholders Approve Key Proposals at Annual Meeting

At the 2025 Annual Meeting of Stockholders held on June 17, 2025, SLM Corporation’s stockholders approved several key proposals, including the 2025 Employee Stock Purchase Plan (ESPP). The plan had previously been approved by the Board of Directors, contingent on stockholder approval. Additionally, the stockholders elected 13 directors for a one-year term, approved executive compensation, and ratified the appointment of KPMG LLP as the independent public accounting firm for 2025. These decisions are likely to impact the company’s governance and financial strategies moving forward.