SLM Corp (NASDAQ:SLM) reports third-quarter earnings after the closing bell on Wednesday afternoon. Investors will be watching closely for key numbers as well as any commentary on the potential financial impact of President Joe Biden's student loan forgiveness program.
The Numbers: Analysts are expecting SLM to report adjusted third-quarter EPS of 48 cents on revenue of $351.3 million. If SLM meets revenue expectations, it would represent a 1.7% sales drop from a year ago.
Related Link: Biden's Student Loan Relief Program On Pause Due To This Court Order: What You Need To Know
Investors will also be watching for fourth-quarter guidance from SLM. Analysts are forecasting fourth-quarter adjusted EPS of 41 cents on revenue of $357.4 million, which would represent a 2.7% year-over-year drop in sales for the quarter.
SLM's earnings expectations have ticked higher along with its stock price over the last month. SLM's average analyst EPS estimate is up from 47 cents 30 days ago, and its stock has traded higher by 15.5% in that time.
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Last quarter, SLM reported a 1.5% EPS miss and a 1.8% revenue beat, and the stock dropped 10% the following day.
The SLM options market is pricing in a 9% move in SLM's share price by the end of the week, so traders should anticipate some sizable post-earnings volatility for SLM.
Why It's Important: SLM's earnings call may help shed some insight on the uncertain standing of Biden's student loan forgiveness program, which was placed on hold by a U.S. appeals court on Oct. 21.
Biden said in August that millions of borrowers would be granted forgiveness on up to $20,000 in student loans. More than 22 million Americans have applied for forgiveness, but several attorneys general from Republican-led states have sued the Biden administration in an effort to block the relief.
Earlier this month, U.S. District Judge Henry Autrey in St. Louis ruled the states had no legal standing to pursue the case, but the 8th U.S. Circuit Court of Appeals granted an emergency petition last week to place the program on hold.
Critics of the loan forgiveness program say it oversteps the authority of the office of the president and that it would inflict harm on private lenders by prompting millions of borrowers to consolidate their debt into the main federal student loan program. However, legal experts have said the states' case is weak at this point unless they can prove individuals or private lenders have been injured by the policy.
Benzinga's Take: SLM's stock has generated two positive returns and one negative return on the day following its last three reports. After SLM's 18.1% year-to-date drop, the stock trades at an attractive 2.2 times sales and 6.1 times forward earnings.
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