Why Sallie Mae (SLM) Stock Plummeted to a One-Year Low Today (Update)

Update (4:48 p.m.): Updated with Thursday market close information.

NEW YORK (TheStreet) -- Sallie Mae  (SLM) plummeted more than 65% to a one-year low of $8.98 on Thursday after the company completed the spin off its loan-management, servicing and asset-recovery business into a new entity called Navient  (NAVI).

Navient will service almost $300 billion in student loans, according to a statement. The consumer banking business keeps the Sallie Mae name.

The stock closed down 64.97%, or $16.73, to $9.02. More than 26 million shares had changed hands, which easily beat the average volume of 5,026,220. The stock had a high of $9.48 for the day and holds a 52-week high of $27.34. 

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Separately, TheStreet Ratings team rates SLM CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate SLM CORP (SLM) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The gross profit margin for SLM CORP is rather high; currently it is at 69.34%. Regardless of SLM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SLM's net profit margin of 19.26% compares favorably to the industry average.
  • SLM, with its decline in revenue, underperformed when compared the industry average of 1.6%. Since the same quarter one year prior, revenues slightly dropped by 9.2%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • SLM CORP's earnings per share declined by 13.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SLM CORP increased its bottom line by earning $2.87 versus $1.94 in the prior year. For the next year, the market is expecting a contraction of 17.2% in earnings ($2.38 versus $2.87).
  • You can view the full analysis from the report here: SLM Ratings Report

STOCKS TO BUY: TheStreet's Stocks Under $10 has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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