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SLM (SLM)
NASDAQ:SLM
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SLM (SLM) AI Stock Analysis

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SLM

SLM

(NASDAQ:SLM)

Rating:61Neutral
Price Target:
$34.00
▲(3.69%Upside)
SLM's overall stock score reflects mixed financial performance with strong profitability but weak cash flow and high leverage. Technical analysis indicates neutral momentum, while valuation remains fair. Positive developments from federal loan reforms and strong Q1 results provide optimism, but risks from increased provisions and loan challenges weigh on the outlook.
Positive Factors
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.
Market Position
SLM's strong presence and market position should allow it to capture opportunities from the privatization of the Grad Plus program.
Negative Factors
Earnings Performance
SLM reported core EPS below both JPMe and Street estimates, driven by higher than estimated provision expense.
Loan Delinquencies
Delinquencies increased for the second consecutive month, reaching the highest level since February.

SLM (SLM) vs. SPDR S&P 500 ETF (SPY)

SLM Business Overview & Revenue Model

Company DescriptionSLM Corporation, commonly known as Sallie Mae, is a publicly traded company that primarily operates in the financial services sector. It specializes in providing education loans, focusing on private student loans for undergraduate, graduate, and professional education. Sallie Mae also offers various financial products, including savings accounts, CDs, and credit cards, aiming to support students and their families in financing higher education.
How the Company Makes MoneySLM Corporation makes money primarily through the origination and servicing of private student loans, which are not funded or guaranteed by the federal government. The company earns revenue from the interest on these loans, as well as fees associated with loan origination and servicing. Additionally, Sallie Mae generates income from its consumer banking operations, including interest and fees from deposits, CDs, and credit card products. The company's earnings are influenced by interest rate environments, demand for private student loans, and its ability to manage credit risk effectively.

SLM Earnings Call Summary

Earnings Call Date:Jul 24, 2025
(Q2-2025)
|
% Change Since: 2.44%|
Next Earnings Date:Oct 22, 2025
Earnings Call Sentiment Neutral
Sallie Mae's earnings call highlighted strong financial performance and positive impacts from federal loan reforms, which are expected to significantly enhance future growth. However, challenges in loan origination volumes and increased credit loss provisions, along with impacts from natural disasters, indicate some areas of concern.
Q2-2025 Updates
Positive Updates
Strong Financial Performance
Sallie Mae reported GAAP diluted EPS of $0.32 per share for the second quarter. Net interest income was $377 million, up $5 million from the prior year quarter, and net interest margin was 5.31%, 4 basis points ahead of the prior quarter.
Improved Credit Quality
The credit quality of originations showed incremental improvement compared to the second quarter of 2024. The cosigner rate increased to 84% from 80%, and the average FICO score at approval rose to 754 from 752.
Significant Share Repurchase
Sallie Mae repurchased 2.4 million shares at an average price of $29.46 per share, reducing shares outstanding by over 53% since 2020.
Positive Momentum from Federal Loan Reforms
Recent federal student loan reforms are expected to generate an additional $4.5 billion to $5 billion in annual private education loan origination volume for Sallie Mae once fully realized.
Negative Updates
Loan Origination Challenges
Loan originations for the second quarter were $686 million, roughly in line with the same period last year but slightly below expectations due to challenges faced by nontraditional school partners.
Increased Provision for Credit Losses
The provision for credit losses was $149 million in the second quarter, up from $17 million in the prior year quarter. This increase is attributed to a more cautious macroeconomic outlook.
Higher Delinquency Rates
Private education loans delinquent 30 days or more were 3.5% of loans in repayment, a slight increase from the 3.3% at the end of the year-ago quarter.
Impact of California Wildfires on Charge-offs
Net private education loan charge-offs in the second quarter were $94 million, an increase of 17 basis points compared to the second quarter of 2024, primarily due to disaster forbearance related to the California wildfires.
Company Guidance
During the Sallie Mae Second Quarter 2025 Earnings Call, the company highlighted several key metrics and future guidance. The GAAP diluted EPS for the second quarter was reported at $0.32 per share. Loan originations totaled $686 million, roughly consistent with the previous year but slightly below expectations, representing less than 10% of the annual total. The cosigner rate improved to 84% from 80% the previous year, with the average FICO score at approval rising to 754. Sallie Mae repurchased 2.4 million shares at an average price of $29.46, reducing outstanding shares by over 53% since 2020. Net interest income for the quarter was $377 million, with a net interest margin of 5.31%. The provision for credit losses was $149 million, up from $17 million the prior year, while the allowance as a percentage of private education loan exposure remained stable at 5.95%. Loans delinquent 30 days or more were 3.5% of loans in repayment, a slight decrease from the first quarter. The company also announced a transaction for the sale of $1.8 billion in private education loans, aligning with their annual expectations. For the second half of 2025, Sallie Mae remains optimistic about the long-term outlook for private student lending, particularly in light of recent federal student loan reforms, and anticipates year-over-year growth in their private student loan portfolio.

SLM Financial Statement Overview

Summary
SLM demonstrates strong profitability with excellent profit margins and a solid return on equity. However, the declining revenue growth and negative cash flow metrics are concerning, posing risks to sustainability and liquidity.
Income Statement
72
Positive
The company exhibits strong profitability with a solid gross profit margin of 76.1% and a net profit margin of 39.4% in the TTM period. However, the revenue growth rate showed a decline of 40.0% from the previous year, which is concerning. EBIT and EBITDA margins are robust at 27.1% and 20.5%, respectively, indicating efficient operational performance.
Balance Sheet
65
Positive
The balance sheet reflects a strong equity ratio of 8.3%, suggesting a decent level of financial stability. However, the debt-to-equity ratio has improved to 0.0 in the TTM period due to zero debt, indicating reduced financial leverage. Return on equity remains impressive at 25.8%, showcasing effective use of shareholder funds.
Cash Flow
58
Neutral
The cash flow analysis indicates challenges with negative free cash flow in the TTM period, suggesting potential liquidity issues. The operating cash flow to net income ratio is negative, highlighting inefficiencies in converting profits to cash. The free cash flow to net income ratio is also negative, reflecting cash management concerns.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue2.99B1.46B1.19B2.41B1.72B
Gross Profit1.44B890.43M1.50B2.06B1.58B
EBITDA816.29M796.11M648.06M1.56B1.25B
Net Income608.33M581.39M469.01M1.16B880.69M
Balance Sheet
Total Assets30.07B29.17B28.81B29.22B30.77B
Cash, Cash Equivalents and Short-Term Investments4.70B4.15B4.67B6.85B6.45B
Total Debt6.44B5.23B5.24B5.93B5.19B
Total Liabilities27.91B27.29B27.08B5.93B5.19B
Stockholders Equity2.16B1.88B1.73B2.15B2.56B
Cash Flow
Free Cash Flow-329.39M-144.64M4.99M-49.52M2.15B
Operating Cash Flow-329.39M-144.64M4.99M-49.52M-182.67M
Investing Cash Flow675.99M-12.46M1.08B2.60B947.33M
Financing Cash Flow228.16M-316.23M-854.89M-2.62B-1.88B

SLM Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price32.79
Price Trends
50DMA
32.71
Negative
100DMA
30.80
Positive
200DMA
28.64
Positive
Market Momentum
MACD
>-0.01
Positive
RSI
45.16
Neutral
STOCH
69.37
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SLM, the sentiment is Neutral. The current price of 32.79 is below the 20-day moving average (MA) of 33.13, above the 50-day MA of 32.71, and above the 200-day MA of 28.64, indicating a neutral trend. The MACD of >-0.01 indicates Positive momentum. The RSI at 45.16 is Neutral, neither overbought nor oversold. The STOCH value of 69.37 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SLM.

SLM Risk Analysis

SLM disclosed 34 risk factors in its most recent earnings report. SLM reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

SLM Peers Comparison

Overall Rating
UnderperformOutperform
Sector (67)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
73
Outperform
$4.55B24.085.64%0.90%-2.56%43.22%
71
Outperform
$7.04B10.7020.47%7.14%9.41%13.98%
68
Neutral
$5.98B21.9917.24%13.77%20.95%
68
Neutral
$11.92B28.533.84%3.12%-2.99%-43.64%
67
Neutral
$17.09B11.289.28%3.81%11.08%-4.02%
62
Neutral
$1.48B29.493.86%5.72%31.82%
61
Neutral
$6.84B16.5618.99%1.52%-4.34%-38.01%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
SLM
SLM
32.22
9.84
43.97%
CACC
Credit Acceptance
515.88
-65.01
-11.19%
NNI
Nelnet
125.89
13.73
12.24%
ALLY
Ally Financial
38.51
-5.01
-11.51%
LC
LendingClub
13.11
1.92
17.16%
OMF
OneMain Holdings
58.29
9.29
18.96%

SLM Corporate Events

Executive/Board ChangesShareholder Meetings
SLM Stockholders Approve Key Proposals at Annual Meeting
Neutral
Jun 20, 2025

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.

The most recent analyst rating on (SLM) stock is a Hold with a $25.00 price target. To see the full list of analyst forecasts on SLM stock, see the SLM Stock Forecast page.

DividendsBusiness Operations and StrategyFinancial Disclosures
SLM Corporation Reports Strong Q1 2025 Financial Results
Positive
May 6, 2025

In the first quarter of 2025, SLM Corporation reported a GAAP net income of $301 million and a diluted earnings per share of $1.40. The company experienced a 7.3% growth in private education loan originations compared to the previous year, reaching $2.8 billion. SLM also achieved a 60% return on common equity and paid a common stock dividend of $0.13 per share. Despite a decrease in net interest margin and deposit portfolio balances, the company maintained strong financial metrics, including a 12.9% total risk-based capital ratio. The sale of $2.0 billion in private education loans contributed to a $188 million gain, highlighting the company’s effective capital allocation strategy.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 30, 2025