On Aug 23, we issued an updated research report on Sallie Mae (SLM - Free Report) . The company’s profitability continues to be curbed by escalating expenses. Also, it faces concentration risk due to over dependence on broker deposits as a key source of funding.
The student lender reported in-line earnings in second-quarter 2017. The results reflected higher net interest income along with improved loans and deposit balance. However, higher expenses and lower non-interest income were on the downside.
Sallie Mae shares have lost 6.4% year to date compared with the industry’s decline of 6.2%.
Further, the Zacks Consensus Estimate for the company’s current-year earnings have been revised 1.4% downward over the past 60 days. As a result, the stock carries a Zacks Rank #4 (Sell).
Sallie Mae’s expenses have witnessed a compound annual growth rate of 12.1% over a period of five years (ended 2016).
The company remains dependent on the broker deposits as a major source of financing. Moreover, the generation of deposits from non-brokered channels would be requiring some time. Thus, this significant exposure to a source of funding remains a concern.
Nevertheless, the loan originations have increased 8% in 2016, with the trend continuing in the first six months of 2017. Thus, the company seems on track to achieve originations of about $4.9 billion in 2017. Also, management expects to improve efficiency ratio through prudent expense management and growth in service portfolio loans.
Better-Ranked Stocks
Some better-ranked stocks in the finance space are JPMorgan Chase & Co. (JPM - Free Report) , State Street Corporation (STT - Free Report) and Carolina Financial Corporation . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
JPMorgan’s Zacks Consensus Estimate for current-year earnings have been revised 2.9% upward in the last 60 days. The company’s share price has increased almost 38.8% in a year.
State Street has witnessed its Zacks Consensus Estimate for the current-year earnings revising 3.9% upward, over the last 60 days. Also, its shares have gained 35.4% in a year’s time.
Carolina Financial has witnessed an upward Zacks Consensus Estimate revision of 8.9% for the current year, over the last 60 days. Its share price has increased 55.5% in the past year.
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Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
On Aug 23, we issued an updated research report on Sallie Mae (SLM - Free Report) . The company’s profitability continues to be curbed by escalating expenses. Also, it faces concentration risk due to over dependence on broker deposits as a key source of funding.
The student lender reported in-line earnings in second-quarter 2017. The results reflected higher net interest income along with improved loans and deposit balance. However, higher expenses and lower non-interest income were on the downside.
Sallie Mae shares have lost 6.4% year to date compared with the industry’s decline of 6.2%.
Further, the Zacks Consensus Estimate for the company’s current-year earnings have been revised 1.4% downward over the past 60 days. As a result, the stock carries a Zacks Rank #4 (Sell).
Sallie Mae’s expenses have witnessed a compound annual growth rate of 12.1% over a period of five years (ended 2016).
The company remains dependent on the broker deposits as a major source of financing. Moreover, the generation of deposits from non-brokered channels would be requiring some time. Thus, this significant exposure to a source of funding remains a concern.
Nevertheless, the loan originations have increased 8% in 2016, with the trend continuing in the first six months of 2017. Thus, the company seems on track to achieve originations of about $4.9 billion in 2017. Also, management expects to improve efficiency ratio through prudent expense management and growth in service portfolio loans.
Better-Ranked Stocks
Some better-ranked stocks in the finance space are JPMorgan Chase & Co. (JPM - Free Report) , State Street Corporation (STT - Free Report) and Carolina Financial Corporation . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
JPMorgan’s Zacks Consensus Estimate for current-year earnings have been revised 2.9% upward in the last 60 days. The company’s share price has increased almost 38.8% in a year.
State Street has witnessed its Zacks Consensus Estimate for the current-year earnings revising 3.9% upward, over the last 60 days. Also, its shares have gained 35.4% in a year’s time.
Carolina Financial has witnessed an upward Zacks Consensus Estimate revision of 8.9% for the current year, over the last 60 days. Its share price has increased 55.5% in the past year.
One Simple Trading Idea
Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.
This proven stock-picking system is grounded on a single big idea that can be fortune shaping and life changing. You can apply it to your portfolio starting today.
Learn more >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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