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SLM Corporation (SLM) — WACC Analysis

WACC Breakdown

SLM Corporation (SLM) has a weighted average cost of capital (WACC) of 12.3%. The cost of equity is 9.2%, derived from a beta of 1.00 and a risk-free rate of 5.0%. The after-tax cost of debt is 15.0%. The capital structure is 45.9% equity and 54.1% debt.

Interpretation

A WACC of 12.3% indicates that the market perceives SLM Corporation as higher-risk, requiring a greater return to compensate investors.

Investors can compare SLM's WACC of 12.3% against industry peers to gauge its relative financing costs. A beta of 1.00 reflects the stock's volatility relative to the broader market.

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VALUATION

SLM WACC: 12.32% for SLM Corporation

Current inputs imply a 9.19% cost of equity and a 18.95% pre-tax cost of debt. Use this discount rate as a starting point for DCF validation.

[01]Current Market Data
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[02]
WACC Calculation Process
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Market Data Loaded
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Company Data Fetched
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Beta Calculated (5Y)
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Inputs Auto-Populated
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WACC Calculated
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Step 2: Enter Ticker Symbol
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Step 4: Review Auto-Populated WACC Inputs

Values are automatically populated from real data. You can adjust them manually if needed.

4.30%
1.000
4.23%
5.00%
21.00%
70.00%
Debt: 30.00%Equity: 70.00%

Please enter a valid company ticker to calculate WACC

SLM Corporation Common Stock (SLM) WACC Results
Weighted Average Cost of Capital
12.32%
Cost of Equity
9.19%
Risk-Free Rate4.96%
Beta1.00
Market Risk Premium4.23%
Cost of Debt
14.97%
Pre-Tax Cost of Debt18.95%
Tax Rate21.00%
Tax Shield3.98%
Capital Structure
Equity: 45.92%($4963.20M)
Debt: 54.08%($5844.12M)
Equity Component
4.22%
45.92% × 9.19%
Debt Component
8.10%
54.08% × 14.97%

SLM Corporation (SLM) WACC in context

SLM Corporation (SLM) currently screens with an estimated WACC of 12.32%. That blends a 9.19% cost of equity, a 18.95% pre-tax cost of debt, and a 45.92% equity weight into the discount rate you would typically use in a DCF model.

screens as a relatively high discount rate, which makes valuation more sensitive to execution and capital structure risk.

What SLM WACC implies

A 12.32% discount rate screens as a relatively high discount rate, which makes valuation more sensitive to execution and capital structure risk.

How this page calculates SLM

This page combines CAPM-based cost of equity with SEC-derived debt and capital structure inputs. The current beta is 1.00 and equity accounts for 45.92% of capital.

What to do next

Validate business quality on the company page, then carry the same discount-rate assumptions into the DCF page to test fair value sensitivity.

Disclaimer: This is not financial advice. Data sourced from SEC EDGAR and Polygon.io. Past performance does not guarantee future results. Always conduct your own research before making investment decisions.