It has been about a month since the last earnings report for Sallie Mae (SLM Quick QuoteSLM - Free Report) . Shares have lost about 9.9% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Sallie Mae Q3 Earnings In Line, Costs & Provisions Rise

Sallie Mae reported third-quarter 2017 core earnings of 17 cents per share, in line with the Zacks Consensus Estimate. The reported figure increased 41.7% from the prior-year quarter.

Earnings growth was supported by an increase in net interest income. The private education loan portfolio and deposits grew considerably. However, these positives were offset by lower non-interest income, higher expenses and rise in provision for loan losses.

Sallie Mae reported core earnings (primarily adjusted for derivatives) of $72.4 million, up 41.6% from the year-ago quarter.

Increased Net Interest Income Offsets Higher Expenses

Net interest income for the third quarter was $282.1 million, up 26.3% year over year. The improvement was mainly driven by an increase in the portfolio size of private education loans. Net interest margin expanded 27 basis points (bps) year over year to 5.85%.

Non-interest income came in at $6.1 million, reflecting a 73.4% decrease from the prior-year quarter, primarily due to lower other income.

The company’s total expenses increased 16.3% year over year to $116.3 million. The rise was mainly due to increased compensation and benefits expenses, higher FDIC assessment fees and other expenses.

Efficiency ratio, on a non-GAAP basis, declined to 40.6% in the quarter from 40.7% in the year-ago period. A lower ratio indicates improved profitability.

Credit Quality Worsens

Provision for loan losses was $54.9 million, up 31.5% year over year.

Delinquencies as a percentage of private education loans in repayment were 2.6%, reflecting an increase from 2% in the year-ago quarter.

Growth in Deposit and Loans

As of Sep 30, 2017, deposits of Sallie Mae Bank were $15 billion, up from $12.9 billion as of Sep 30, 2016. Increase in retail and other deposits contributed to the rise.

As of Sep 30, 2017, the private education loan portfolio was $17 billion, up 23.6% year over year. Loan origination climbed 3% year over year to $1.9 billion in the reported quarter. Average yield on the loan portfolio was 8.5%, up 50 bps year over year.

Strong Capital Position

As of Sep 30, 2017, Sallie Mae Bank’s Tier 1 capital to risk-weighted assets and common equity Tier 1 capital were both 11.8%. Capital ratios exceeded the “well capitalized” industry benchmark in regulatory requirements.

2017 Outlook

The company estimates core earnings per share of around 72 cents for this year.

Operating efficiency ratio on a non-GAAP basis is expected in the range of 38% to 39%.

Private education loan originations are projected to be $4.8 billion.

NIM is expected to be about 5.90% in 2017.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the past month as none of them issued any earnings estimate revisions.

At this time, Sallie Mae's stock has a subpar Growth Score of D, though it is lagging a bit on the momentum front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate investors will probably be better served looking elsewhere.

Outlook

The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.