SLM (SLM) Is Up 7.5% After Strong Q3 Loan Growth and Renewed Capital Return Program – What's Changed

• SLM Corporation recently announced its third-quarter 2025 financial results, reporting a net income of US$135.85 million compared to a loss a year earlier, alongside continued share repurchases and declared dividends for both common and preferred stock.
• An important highlight is the 6.4% year-over-year growth in private loan originations to US$2.9 billion, indicating effective lending strategies even as credit expenses rose and earnings came in below market expectations.
• We'll examine how SLM's robust loan origination growth and capital return program may reshape its investment narrative going forward.

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SLM Investment Narrative Recap

To own SLM stock, you have to believe in its ability to capture incremental growth from recent federal student loan reforms, leveraging core strengths in private student lending and capital return, even as higher credit expenses and below-expectation earnings underscore near-term pressures. This quarter’s news provides renewed evidence of SLM’s robust private loan origination growth and steady buyback activity, but doesn’t fundamentally alter the key short-term catalyst: winning market share as federal lending tightens. Persistently rising delinquency and net charge-off rates remain the biggest risk, and the current news doesn’t materially change that outlook.

Among SLM’s recent announcements, the $165.86 million buyback of over 5.6 million shares stands out. Completing almost 10% of shares repurchased under its multiyear program reinforces SLM’s ongoing focus on capital returns, an important consideration for investors seeking value as origination growth becomes a central narrative. In contrast, growing credit risk, which could pressure net interest margins, should remain on your radar, especially if ...

Read the full narrative on SLM (it's free!)

SLM's outlook anticipates $2.0 billion in revenue and $918.9 million in earnings by 2028. This implies a 17.4% annual revenue growth rate and a $493.6 million earnings increase from the current $425.3 million.

Uncover how SLM's forecasts yield a $35.18 fair value, a 27% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members currently estimate SLM’s fair value between US$35.18 and US$54.55, based on two independent forecasts. While this broad range reflects varied growth assumptions, the risk that persistent borrower delinquencies could compress future margins is a key factor for anyone weighing these viewpoints.

Explore 2 other fair value estimates on SLM - why the stock might be worth just $35.18!

Build Your Own SLM Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your SLM research is our analysis highlighting 4 key rewards and 4 important warning signs that could impact your investment decision.
• Our free SLM research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate SLM's overall financial health at a glance.

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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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