Why Sallie Mae Stock Jumped 10% Today

By Jordan Wathen Markets Fool.com

What happened

Continue Reading Below

Shares of Sallie Mae (NASDAQ: SLM), formally SLM Corporation, are soaring by nearly 10% as of 10:30 a.m. EDT on Thursday after the company beat earnings expectations in the first quarter.

So what

Sallie Mae saw its net income to common shareholders jump to $89 million in the first quarter ($0.20 per diluted share), up from $61 million ($0.14 per diluted share) in the year-ago period. Results were helped primarily by a $58 million increase in net interest income and a $7 million decrease in provisions for credit losses.

Sallie Mae earnings beat expectations, helped by lower provisions and higher net interest income. Image source: Getty Images.

The company originated $1.8 billion of private student loans in the first quarter, an increase of 2% over the year-ago period, bringing its average private student loan portfolio to $15.4 billion during the first quarter, a 31% increase over the year-ago period.

Continue Reading Below

In a presentation, Sallie Mae emphasized the credit quality of its recent originations, pointing to the fact that 90% of its new originations had a cosigner and that its average borrower had a FICO score of 748.

Now what

Sallie Mae's guidance calls for full-year 2017 diluted core earnings per share of $0.70 to $0.72 and private education loan originations of $4.9 billion. Low delinquency rates and rising yields on its loan portfolio were major contributors to its better-than-expected earnings this quarter, a trend investors would like to see continue.

10 stocks we like better than SLM
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and SLM wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of April 3, 2017

Jordan Wathen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.