Should SLM Corporation (SLM) be Part of a Diversified Investment?

Analysts at Stephens, assumed coverage of SLM Corporation (NASDAQ:SLM) with Overweight recommendation, according to their opinion released on July 10. Analysts at B. Riley FBR, Inc. are sticking to their Buy recommendation. However, on January 19, they lifted target price for these shares to $13 from $14. Analysts at B. Riley FBR, Inc., made their first call for the stock with a Buy rating, according to a research note that dated back to January 19.

How do you judge Wall Street’s opinion of SLM stock? You could look at price, sure. But that doesn’t tell the whole story. Short sellers are betting against SLM Corporation (NASDAQ:SLM) during the most recent two-week period. Looking at the sentiment indicator for the SLM stock we see that the short-interest ratio is at 6.950415 while the average analyst recommendations at 0 suggests selling these shares. Between December 14 and December 31, the total number of shorted shares amounted to 27.59 million shares. That was 5.51% more than the total of 26.15 million shares in the space of prior two weeks, which means more traders or funds betting that the stock will go down. Average daily volume for SLM Corporation at the December 31st settlement jumped to 3,969,698, as compared to 3,109,601 at the December 14th report. That brought days to cover 17.35% down from the 8.409864 days to cover recorded at the prior short interest data release.

By watching the trading activity of corporate insiders, it will become easier to get a sense of SLM Corporation (NASDAQ:SLM)’s prospects. The earliest insider trade took place on 08/03/2018. Thome Paul F parted with a total of 22.1 thousand shares of company at average share price of $11.13. The total for the sales was set at $246.02 thousand. After this transaction, the EVP & Chief Admin Officer account balance stood at 207.23 thousand shares. The stock lost -18.87 percent since that insider sale. On 06/06/2018, Mcgarry Steven, EVP & CFO, sold 95.58 thousand shares at a price per share of $11.88. This removed 1.14 million shares from the insider’s fortune and the stock saw a -23.99 percent retreat in value since the news became public. This transaction left 245.48 thousand shares in the EVP & CFO account. On 05/21/2018, SVP, General Counsel Jafarieh Nicolas performed a sale transaction worth $104.08 thousand. This sale at $11.68 each has eliminated 8.91 thousand shares from the insider’s portfolio position. Meanwhile, shares have recorded -22.69 percent decrease since the transaction was reported. The insider now is left with 51.81 thousand shares remaining in the account. Goode Earl A, who performs the Director job, sold 4.62 thousand shares for $53.6 thousand. The disposal occurred on 05/02/2018 was priced at $11.61 per share. The share price plunged -22.22 percent since the reporting date. Goode Earl A now left with a stake of 88.85 thousand SLM stock worth $802.31 thousand after the insider selling.

SLM Corporation (SLM) is expected to jump by 51.16 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $16-month high price target. This represents a whopping 77.19 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $13.75, which represents a return potential of 52.27 percent when compared to the closing price of the stock of $9.03 on Friday, January 11. The lowest price target for the stock is $11 — slightly more than 21.82 percent from SLM’s current share price.

The shares are currently floating around the first support level of $8.93. Below this, the next support is placed in the zone of $8.84. Till the time, the SLM stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 50.2 on daily chart, which may remain a cause for concern. If the price breaks below $8.84 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $9.11 mark may result into a pull-back move towards $9.2 level.

SLM shares dropped -0.11 points or -1.2 percent on Friday to $9.03 with a heavy trade volume of 4.379 million shares. After opening the session at $9.07, the shares went as high as $9.1 and as low as $8.92, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $3.98 billion and now has 440.96 million shares outstanding. SLM Corporation (SLM) stock has lost -2.69 percent of market value in 21 trading days.

SLM stock has a trailing 3-year beta of 1.3, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was $0.74 a share in the trailing twelve months. The stock’s value has surged 8.66 percent year to date (YTD) against a decline of -24.31 percent in 12 month’s time. The company’s shares still trade -27.53 percent away from its 1-year high of $12.46 and 13.66 percent up from 52-week low of $7.95. The average consensus rating on the company is 0, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a buy.

Shares of SLM Corporation (SLM) are trading at a P/E ratio of 17.82 times earnings reported for the past 12 months. The industry SLM operates in has an average P/E of 44.45. Its P/E ratio went as low as 11.07X and as high as 24.3 over the 5-year span. Further, it is sporting a 2.22 on the Price-to-Sales ratio. Compare this with the industry average P/S of 6.91. 72.7 percent is the gross profit margin for SLM Corporation and operating margin sits at 31.6 percent. Along with this, the net profit margin is 20.7 percent.