Sallie Mae On-track with Strategic Initiatives; Time to Buy? - Analyst Blog

On Dec 30, 2014, we issued an updated research report on Sallie Mae ( SLM ). Shares of this Delaware based financial institution gained nearly 15% since the separation of SLM Corporation into two distinct publicly-traded entities on Apr 30, 2014. We believe Sallie Mae is well positioned to grow independently as it remains focused on achieving its strategic objectives.

Sallie Mae is currently making progress with the five important objectives laid down this year. The company aims to enhance private education loan assets and revenues, maintain a strong capital position and complete the process to independently originate and service Private Education Loans. Further, it is focused on expansion of the bank's scope in improving risk management and internal controls along with expense management to enhance efficiency.

Notably, during third-quarter 2014, the company originated $1.6 billion of new loans, reflecting an increase of 8% year over year. Also it remains focused to achieve the 2014 target of $4 billion in originations.

In October, Sallie Mae completed the operational separation of its servicing platforms and personnel from Navient Corporation ( NAVI ) and introduced new customer service operation. Further, it expects to establish the Sallie Mae Bank's independent loan originations platform in the first half of 2015. We believe the gradual achievement of its stated goals will increase growth prospects of the company.

Nevertheless, we remain cautious owing to several issues that the new entity is encountering. These include a competitive environment in the saturated banking space, absence of large scale benefits and the prevailing stringent regulatory landscape.

Over the past 30 days the Zacks Consensus Estimate remained stable at 43 cents per share and 61 cents per share for 2014 and 2015, respectively.

Sallie Mae currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the finance space include Customers Bancorp, Inc. ( CUBI ) and First Community Bancshares, Inc. ( FCBC ). Both the stocks sport a Zacks Rank #1 (Strong Buy).

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SLM CORP (SLM): Free Stock Analysis Report

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NAVIENT CORP (NAVI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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