Slm Corp is scored 77 for moat and 75 for management. The management score rests on a return on invested capital of 8.6% and a gross margin of 53.1% — figures that describe a business earning a respectable return on what it employs. The balance sheet carries debt at 2.39x equity, which magnifies both the returns above and the risk beneath them.
Three independent anchors set the price worth paying. Growth is modelled at 5.8% a year, below the 6.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 10.1x. That produces an intrinsic value of $15.72, a 10-CAP price of $34.44 and a payback time price of $35.87, with the value zone set at the highest of the three, $35.87. Today's price of $22.61 sits inside that zone.
A business scoring this well, trading inside its value zone, is the combination the framework exists to find — which is also the reason to check why the market disagrees. A margin of safety score of 35 describes the cushion, not the certainty.
| Price | $22.61 |
| Market cap | $4.3B |
| P/E ratio | 6.3x |
| Return on invested capital | 8.6% |
| Gross margin | 53.1% |
| Debt to equity | 2.39x |
| Free cash flow yield | 10.3% |
| Growth rate used | 5.8% |
| Growth rate measured | 6.0% |
| Exit multiple assumed | 10.1x |
| Company | Moat | Buy price |
| Bread Financial Holdings Inc (BFH) | 62 | $599.11 |
| Credit Acceptance Corp (CACC) | 54 | $1,240.46 |
| Onemain Holdings Inc (OMF) | 74 | $279.10 |
| Ally Financial Inc (ALLY) | 25 | $23.91 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Slm Corp rather than accepting ours.