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9 Consumer Finance Stock Plays From eBay to Capital One

5. SLM Corp.
Shares of SLM Corp. (SLM) of Newark, Del., closed at $15.83 Thursday, returning 21% year-to-date, after returning 9% during 2011.

The shares trade for less than seven times the consensus 2013 EPS estimate of $2.32.

Based on a quarterly payout of 12.5 cents, the shares have a dividend yield of 3.16%.

Sakhrani has a price target of $19 for SLM, implying 20% upside.

The analyst consensus is for the student lender to report third-quarter operating earnings of 54 cents a share, increasing from operating EPS of 49 cents in the second quarter, and 36 cents, during the third quarter of 2011.

Sakhrani estimates that SLM will report earnings of 53 cents for the third quarter, with a full-year EPS estimate of $2.13 for 2012 and $2.27 for 2013.

The analyst said that third-quarter themes for Salle Mae include credit quality, since "in 3Q12, both the charge-off rate and delinquency rate ticked up sequentially, mainly due to some seasonality in its collections from a higher level of loans that have entered into repayment having a higher level of delinquencies," and capital management, as the company "increased its share repurchase program by an additional $400 million in 2Q12 and on the conference call noted that it had about 60% of its authorization remaining."

Sakhrani expects "$150 million in share repurchases in 3Q12, which compares to $341 million in 2Q12.

SLM Chart SLM data by YCharts

Interested in more on SLM Corp.? See TheStreet Ratings' report card for this stock.
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