A Look at SLM Corporation (SLM) Valuation Following Strong Private Loan Growth and Improved Credit Provisions

SLM (SLM) delivered its latest financial results with higher private education loan originations and a decrease in provision for credit losses after a large loan sale. This offers investors a closer look at its ongoing capital management.

See our latest analysis for SLM.

SLM’s steady operational improvements seem to be making an impact on investor sentiment, with a 1-year total shareholder return of 4.6% that’s well ahead of the latest share price gains. While recent returns have been modest, momentum has built impressively over the longer term. The three- and five-year total shareholder returns stand out at nearly 75% and 180% respectively.

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With SLM now trading at a notable discount to many analyst targets and showing steady financial progress, the key question is whether there is still unrecognized value for buyers or if expectations for future growth are already fully reflected in the price.

Most Popular Narrative: 19.7% Undervalued

SLM's most cited narrative sees fair value well above its last close, highlighting a potential pricing gap that has piqued the market’s attention. This outlook draws from a blend of projected growth, sector shifts, and profitability assumptions that are driving anticipation for deeper upside.

The recently enacted federal student loan reforms, which cap borrowing under Parent PLUS and eliminate Grad PLUS, are expected to shift $4.5 to $5 billion in annual loan volume from the federal to the private market, directly expanding SLM's addressable market. This is poised to drive higher revenue growth beginning in 2027 as the impact phases in. SLM is well positioned to capture this incremental private loan opportunity due to its dominant share, deep school relationships, disciplined underwriting, and leading digital origination platform, supporting long-term growth in loan originations and sustaining or improving net interest income.

Read the complete narrative.

Want to see what’s behind this bold valuation? There’s a secret mix of big market changes, rising profit margins, and ambitious growth targets. But the real surprise is just how aggressive the outlook is. Ready to discover the full story?

Result: Fair Value of $34.73 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent credit pressures or competition from larger players could dampen SLM’s growth story. This may prompt investors to reconsider the optimistic outlook.

Find out about the key risks to this SLM narrative.

Build Your Own SLM Narrative

If you have a different view or want a deeper hands-on look at the numbers, you can build your own perspective in just a few minutes. Do it your way

A great starting point for your SLM research is our analysis highlighting 4 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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