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Capital One Financial Corporation (COF), headquartered in McLean, Virginia, operates as the financial services holding company for the Capital One, National Association, which engages in the provision of various financial products and services in the U.S., Canada, and the U.K. Valued at $52.08 billion by market cap, the company’s product and service portfolio comprises checking and savings accounts, money market deposits, time deposits, credit card loans, auto and retail banking loans, credit and debit card products, online direct banking services, treasury management, etc. The financial services major is expected to announce its fiscal second-quarter earnings for 2024 after the market closes on Tuesday, Jul. 23.
Ahead of the event, analysts expect COF to report a profit of $3.24 per share on a diluted basis, down 8% from $3.52 per share in the year-ago quarter. The company surpassed Wall Street’s EPS projections in two of the past four quarters but missed the forecasts on two other occasions. During the previous quarter, COF’s provision for credit losses declined by $174 million to $2.7 billion, and its CET1 ratio was 13.1%. It also announced an agreement to acquire Discover Financial Services during the quarter.
For fiscal 2024, analysts expect COF to report EPS of $13.35, up 6.6% from $12.52 in fiscal 2023.
COF stock has underperformed the S&P 500’s ($SPX) 17.3% gains on a YTD basis, with shares up 3.8% during this period. Similarly, it has underperformed the S&P 500 Financials Sector SPDR’s (XLF) 10.7% returns over the same time frame.
On Apr. 25, COF reported its Q1 results. Its adjusted EPS was $3.21, falling short of the consensus estimates of $3.25. The company’s adjusted revenue of $9.40 billion beat the Wall Street estimates of $9.35 billion. COF shares closed down more than 1% on the day the results were released but have been on a downtrend since then.
COF’s overall performance can be attributed to its acquisition of Discover Financial Services and the risks arising from a weakening consumer. The planned acquisition would make COF the largest credit card lender in the U.S., enabling the company to access Discover’s payment networks and create a closed-loop payment network like its larger peers. However, the deal is subject to regulatory approvals. Moreover, with credit card debt burgeoning, the company’s net charge-off rate from credit card loans in Q1 stood at 5.9%, up from 4.1% in the year-ago quarter.
Analysts’ consensus opinion on COF stock is bullish, with a “Moderate Buy” rating overall. Out of 21 analysts covering the stock, seven advise a “Strong Buy” rating, one has a “Moderate Buy” rating, 12 recommend a “Hold” rating, and one gives a “Strong Sell.” The average analyst price target for COF is $149.74, indicating a 9.3% potential upside from the current levels.
On the date of publication, Dipanjan Banchur 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.
