What Are Analysts Saying About SLM Corporation’s (NASDAQ:SLM) Future?
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SLM Corporation’s (NASDAQ:SLM) latest earnings announcement in December 2018 confirmed that the company gained from a sizeable tailwind, eventuating to a high double-digit earnings growth of 73%. Below is a brief commentary on my key takeaways on how market analysts predict SLM’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Check out our latest analysis for SLM
Analysts’ expectations for this coming year seems buoyant, with earnings rising by a robust 14%. This growth seems to continue into the following year with rates arriving at double digit 30% compared to today’s earnings, and finally hitting US$674m by 2022.
While it is helpful to understand the growth year by year relative to today’s level, it may be more beneficial to gauge the rate at which the company is growing every year, on average. The advantage of this technique is that we can get a better picture of the direction of SLM’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 12%. This means, we can expect SLM will grow its earnings by 12% every year for the next few years.
Next Steps:
For SLM, I’ve compiled three pertinent aspects you should further research:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is SLM worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether SLM is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SLM? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
