Investment Thesis
SLM Corp exhibits strong profitability metrics (28.4% net margin, 30.4% ROE) but faces critical financial deterioration signals. Negative operating cash flow of -$398.6M despite +$744.8M net income indicates earnings quality issues, while high leverage (2.19x Debt/Equity) and weak interest coverage (3.6x) create vulnerability.
Strengths
- Strong revenue growth of 74.9% year-over-year demonstrates market demand
- Excellent net profit margin of 28.4% and operating margin of 37.8% show pricing power
- Solid cash position of $4.2B provides near-term liquidity buffer
Risks
- Negative operating cash flow of -$398.6M contradicts positive net income, signaling earnings quality concerns or unsustainable working capital dynamics
- High financial leverage (2.19x Debt/Equity ratio) combined with modest interest coverage (3.6x) leaves minimal margin for operational stress or rate volatility
- Divergence between revenue growth (74.9%) and net income growth (2.2%) suggests deteriorating business economics and potential margin compression
Key Metrics to Watch
- Operating cash flow trend and cash conversion rate relative to reported earnings
- Interest coverage ratio movement and total debt levels
- Net income growth acceleration to match revenue growth trajectory
Financial Metrics
Revenue
2.6B
Net Income
744.8M
EPS (Diluted)
$3.46
Free Cash Flow
-398.6M
Total Assets
29.7B
Cash
4.2B
Profitability Ratios
Gross Margin
N/A
Operating Margin
37.8%
Net Margin
28.4%
ROE
30.4%
ROA
2.5%
FCF Margin
-15.2%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
2.19x
Debt/Assets
91.8%
Interest Coverage
3.59x
Long-term Debt
5.4B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-04-16T01:33:27.940553 |
Data as of: 2025-12-31 |
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