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Sallie Mae

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Shares of Sallie Mae have underperformed the industry over the past six months. Also, the company doesn’t have an impressive earnings surprise history. It surpassed the Zacks Consensus Estimate for earnings in one of the trailing four quarters. A competitive business environment and consistently increasing expenses remain near-term concerns. Further, Sallie Mae faces concentration risks due to over dependence on brokered deposits. However, the company’s focus on strengthening its Private Education Loan assets and revenues along with maintaining a strong capital position bode well for the long term. Also, the economic recovery and declining unemployment rate should help it maintain a leading position in the student lending market. Nevertheless, stretched valuation indicates limited upside potential in the stock.

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