Sallie Mae’s stock price has taken a beating over the past six months, shedding 20.6% of its value and falling to $18.33 per share. This was partly driven by its softer quarterly results and may have investors wondering how to approach the situation.
Is there a buying opportunity in Sallie Mae, or does it present a risk to your portfolio? See what our analysts have to say in our full research report, it’s free.
Why do we think Sallie Mae will underperform?
Even with the cheaper entry price, we don’t have much confidence in Sallie Mae. Here are two reasons why SLM doesn’t excite us, plus one stock we’d rather own.
1. Revenue spiraling downwards
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
Over the last five years, Sallie Mae’s demand was weak and its revenue declined by 1.3% per year. This wasn’t a great result and is a sign of poor business quality.
2. EPS trending down
Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.
Sallie Mae declined their EPS by 5.3% annually over the last five years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.
Final judgment
Sallie Mae doesn’t pass our quality test. Following the recent decline, the stock trades at 6.7× forward P/E (or $18.33 per share). While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are more exciting stocks to buy at the moment. We’d suggest looking at a top digital advertising platform riding the creator economy.
Stocks we would buy instead of Sallie Mae
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
