SLM Corporation Just Missed Earnings - But Analysts Have Updated Their Models

SLM Corporation (NASDAQ:SLM) just released its latest third-quarter report and things are not looking great. Results showed a clear earnings miss, with US$373m revenue coming in 2.5% lower than what the analystsexpected. Statutory earnings per share (EPS) of US$0.63 missed the mark badly, arriving some 21% below what was expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

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Following the latest results, SLM's six analysts are now forecasting revenues of US$1.60b in 2026. This would be a decent 9.4% improvement in revenue compared to the last 12 months. Per-share earnings are expected to expand 18% to US$3.44. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.64b and earnings per share (EPS) of US$3.44 in 2026. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.

See our latest analysis for SLM

The consensus has reconfirmed its price target of US$34.73, showing that the analysts don't expect weaker revenue expectations next year to have a material impact on SLM's market value. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on SLM, with the most bullish analyst valuing it at US$42.00 and the most bearish at US$29.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. One thing stands out from these estimates, which is that SLM is forecast to grow faster in the future than it has in the past, with revenues expected to display 7.4% annualised growth until the end of 2026. If achieved, this would be a much better result than the 6.8% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 14% per year. Although SLM's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. With that said, earnings are more important to the long-term value of the business. The consensus price target held steady at US$34.73, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for SLM going out to 2027, and you can see them free on our platform here..

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 4 warning signs with SLM (at least 2 which don't sit too well with us) , and understanding these should be part of your investment process.

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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.