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With a market cap of $53.1 billion, Capital One Financial Corporation (COF), based in McLean, Virginia, serves as the financial services holding company for Capital One, National Association. The company offers a wide range of financial products and services across the U.S., Canada, and the U.K.
Shares of this financial services company have outperformed the broader market over the past year. COF has surged 39.1% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 27%. However, in 2024, COF stock soared 6.4% compared to SPX's 16.8% return on a YTD basis.
Zooming in further, COF also surpasses the Financial Select Sector SPDR Fund (XLF), which has returned 31% over the past year.
Capital One Financial’s bullish momentum can be attributed to its ability to navigate challenges while continuing to grow its business. The recent agreement to acquire Discover Financial Services (DFS) significantly expands its operations in the credit card sector, further enhancing its market presence. This strategic move has contributed to the overall increase in its stock value despite occasional volatility.
On Jul. 23, Capital One reported Q2 earnings of $597 million, or $1.38 per share, with adjusted earnings of $3.14 per share. Although these results fell short of Wall Street's expectations, the company posted revenue of $9.5 billion, aligning with the forecasts. Despite the earnings miss, the stock experienced an upward trend over the following four trading sessions.
For the current fiscal year, ending in December 2024, analysts expect Capital One Financial’s EPS to grow 4.6% annually to $13.10 on a diluted basis. The company's earnings surprise history is disappointing. It missed the consensus estimate in three of the last four quarters and exceeded it on only one occasion.
Among the 21 analysts covering COF stock, the consensus rating is a “Moderate Buy.” That’s based on seven “Strong Buy” ratings, one “Moderate Buy,” 12 “Holds,” and one “Strong Sell.”
This configuration is more bullish than three months before, with six analysts advising a “Strong Buy.”
On Jul. 24, Bank of America (BAC) raised its price target on Capital One to $161 from $158 while maintaining a “Buy” rating on the shares. The brokerage firm also updated its adjusted EPS estimates for 2024 and 2025 to $13.06 and $16.13, respectively, reflecting the impact of Q2 results and insights from the company's commentary.
The mean price target of $155.89 represents an 11.8% premium to COF’s current price levels. The Street-high price target of $208 suggests an upside potential of 49.1%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
