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COF

Capital One Financial NYSE:COF Stock Report

Last Price

US$92.17

Market Cap

US$35.4b

7D

-1.7%

1Y

-44.7%

Updated

02 Oct, 2022

Data

Company Financials +
COF fundamental analysis
Snowflake Score
Valuation5/6
Future Growth0/6
Past Performance2/6
Financial Health6/6
Dividends4/6

COF Stock Overview

Capital One Financial Corporation operates as the financial services holding company for the Capital One Bank (USA), National Association; and Capital One, National Association, which provides various financial products and services in the United States, Canada, and the United Kingdom.

Capital One Financial Corporation Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Capital One Financial
Historical stock prices
Current Share PriceUS$92.17
52 Week HighUS$174.65
52 Week LowUS$90.27
Beta1.43
1 Month Change-11.56%
3 Month Change-13.72%
1 Year Change-44.66%
3 Year Change5.55%
5 Year Change5.89%
Change since IPO1,628.19%

Recent News & Updates

Sep 15

Capital One August credit card metrics mixed with delinquencies up, net charge-offs down

Capital One Financial (NYSE:COF) credit card metrics for August were mixed as its domestic delinquency rate drifted up from the prior month, though net charge-offs edged down amid an increase in the amount of borrowing. The delinquency rate stood at 2.76% in August, up from 2.56% in July and 1.79% a year earlier. Its net charge-off rate of 2.02%, however, slid from 2.36% in July but up from 1.54% in August 2021. The card issuer's domestic credit card loans held for investment increased to $120.48B at the end of August from $117.6B at July 31. Previously, (Aug. 15) Capital One July credit card delinquency, net charge-off rates rise further in July.

Aug 31

Citigroup - A Little Post-Earnings Bump, But A Lot Of Work Still To Do

Summary Citigroup reported better-than-expected results for Q2, but the competitiveness of the core U.S. banking operations is still in question as competition intensifies in areas like cards. Citi is winding down its consumer and commercial lending operations in Russia, and the sale of its Mexican subsidiary could be compromised by government mandates concerning local ownership and employment. Very modest long-term growth assumptions can support a substantially higher share price, but a more meaningful rerating remains tied to visibility on 10%+ ROTCE. The long wait for substantial improvement at Citigroup (C) goes on; second quarter earnings were better than expected, and something of a standout next to peer banks, but underlying results still show a lot of need for improvement. Down more than 20% since my last update, Citi has done a little better than other large banks, but that outperformance has started to fade more recently. The need to build capital will limit capital returns to shareholders in the near term, and there are still meaningful uncertainties around the company’s efforts to simplify and restructure the business, not to mention compete effectively with more vigorous competition in core banking. The biggest positive for the Citigroup investment case is the exceptionally low level of expectations built into the share price, but regaining a double-digit return on tangible common equity not only remains a key driver for the shares, but one that looks to be at least two years off. Looking For Differentiation In Main Street Banking One of the bigger takeaways from the second quarter is the relative strength of “Main Street” banking versus money center banking – basic lending and services to businesses and consumers as opposed to capital market activities (trading, et al). That tempers some of the enthusiasm over Citi’s relatively better performance in areas like trading and Treasury & Trade Solutions activities like liquidity management and payments, particularly given some modest evidence of underperformance in more basic lending and deposit-gathering functions. Citi wasn’t one of the more asset-sensitive banks to begin with, and what sensitivity it has is moderating some as the rate cycle moves on. Deposits declined modestly on an end-of-period basis in the second quarter, with a 2% decline in non-interest-bearing deposits, and Citi is currently among the banks paying the most for CDs (along with Citizens Financial (CFG) and Capital One (COF)) versus banks like Bank of America (BAC), PNC (PNC), and Wells Fargo (WFC) that can rely on larger, stickier, high-quality deposit franchises. Interest-bearing deposit costs rose 20bp qoq in the second quarter, and Citi’s ability to attract and hold low-cost deposits will be an important factor in this next phase of the cycle. Likewise with lending activity. While Citi remains competitive in card lending, loan growth ex-cards was weaker than the sector average. With mortgage lending looking less attractive and banks like Bank of America and PNC significantly stepping up their efforts in middle-market lending, Citi has work to do here as well to show differentiation and competitiveness in Main Street banking. I'd also note that, while spending growth in cards has been good (up 31% from 2019 levels), fees are actually down slightly from 2019 levels as the market has become significantly more competitive. Restructuring Goes On Citi continues to work toward winding down its expansive non-U.S. operations. Most recently, the company announced that it would begin winding down its Russian consumer and commercial banking operations, having not been able to find a buyer. I don’t see much credit risk in this business at this point, as much of the lending exposure to the Russian operations is to large multinationals, and I’d also note that the bank isn’t exiting its large corporate client business. All in all, I would expect the costs of unwinding this business to cost around $0.10 to $0.12 per share over the next 12 to 18 months. In the meantime, substantial uncertainties remain around Citi’s ability to extract full value for its Banamex operations (its Mexican banking subsidiary). The President of Mexico has set out several conditions for the deal that will complicate matters for Citi, including effectively pushing out potential non-Mexican bidders like BBVA (BBVA), HSBC (HSBC), and Santander (SAN), and insisting that there be no post-deal layoffs. While Lopez Obrador’s statements don’t have the force of law, as a practical matter Citi likely won’t get anywhere defying them given that the deal has to be approved by regulators appointed by Lopez Obrador. The Outlook Although I think this phase in the cycle favors core Main Street banking operations (a positive for banks like PNC, relatively speaking), I don’t ignore the recent improvements at Citi’s Treasury & Trade Solutions operations; these global operations make up a substantial portion of the company’s deposits, they’re quite profitable, and they require low levels of capital. At a time when the bank is having to shrink risk-weighted assets to boost its CET 1 capital ratio, success here is even more valuable. Even so, I want to see better results from the core U.S. banking operations. As I’ve discussed before, Citi’s U.S. banking operations are different from more traditional branch banking operations, with a much greater focus on core urban markets (New York, Chicago, Miami, LA, et al) and a national digital bank. Card lending remains a key profit driver, and while Citi’s card operations are still quite competitive, many other banks are trying to grow their card businesses. My concern is that Citi is going to see greater competition now on multiple fronts – more competition for national digital bank deposits (as other banks pursue expanded “branch-light” strategies), more competition for business loans in attractive urban markets, and more competition in its lucrative card businesses.

Aug 13

Another Great Quarter For Capital One

Capital One posted Q2 results showing nice net interest income growth and solid earnings. The company is seeing a slight uptick in credit metrics, but I don't foresee any wild upward swing with the mixed bag economy we have. At under 1.5x book value, I will continue to dollar cost average my position. Introduction Capital One (COF) has released the results for the half year, and the bank is continuing strong trends seen before. There is some fear that the recession and inflation will cause credit metrics to deteriorate, and while it seems they are on the increase, I believe it will be at a very slow pace. The bank is posting solid top-line growth and earnings while holding on to healthy customers. As stated in prior articles, I am still dollar cost averaging my long-term position when the bank is under 1.5x book value. Second Quarter And Six Months In Q2, Capital One continued the same trends in prior quarters. The bank is seeing strong revenue growth on the back of higher net interest margins and purchase volumes. Net interest income grew by 13% and 12% for the quarter and half year, respectively. This is due in part to Fed interest rate increases, which pushed net interest margins up 57 basis points this year so far. On top of this, Capital One is still seeing high purchase volume growth, with the year so far up 17%. So customers are spending more and at a higher price. But as happened in the first quarter, net income declined. Net income saw a decrease from the prior year of 43% and 34% for Q2 and the half year respectively. This was solely due to the bank having positive provisions for losses - a very normal thing, by the way. The overshoot in reserves from the pandemic seems to have been weaned off, as the allowance ratio is now down to 3.88%. Capital One has increased provision for losses thing year due to the slight uptick in charge-off and delinquency rates. These rates have slowly been raising from all-time lows. This year, the net charge-off rate is up 11 basis points, while the 30+ day delinquency rate has increased 13 basis points. These are small increases, but the trend of stable low rates seems to be reversing course. This may be true, but the rates are still at significantly low values, as the net charge-off rate is 1.15%, and the delinquency rate is 2.54%. This is a stark contrast to pre-pandemic rates of 2.53% and 3.74% each. Overall, Capital One is performing wonderfully. Net interest income is growing, and the customer is very healthy. I believe the bank will see the credit metrics continue to slide back to normal, but very slowly. There is some fear that a recession is here, and high inflation may derail the customer base's ability to pay. But the economy is very mixed right now. While it is a technical recession, and inflation is at 8.5%, the jobs report showed growth of 528,000 jobs and an unemployment rate of 3.5%. For a credit card centered bank, this means customers as a total are seeing increased costs but do have jobs. This is why I think the reversal in credit metrics will be slow and is not a worrisome factor. Valuation

Shareholder Returns

COFUS Consumer FinanceUS Market
7D-1.7%-4.2%-2.5%
1Y-44.7%-40.3%-23.2%

Return vs Industry: COF underperformed the US Consumer Finance industry which returned -40.3% over the past year.

Return vs Market: COF underperformed the US Market which returned -23.2% over the past year.

Price Volatility

Is COF's price volatile compared to industry and market?
COF volatility
COF Average Weekly Movement5.3%
Consumer Finance Industry Average Movement7.7%
Market Average Movement6.8%
10% most volatile stocks in US Market15.5%
10% least volatile stocks in US Market2.8%

Stable Share Price: COF is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: COF's weekly volatility (5%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
198853,600Rich Fairbankhttps://www.capitalone.com

Capital One Financial Corporation operates as the financial services holding company for the Capital One Bank (USA), National Association; and Capital One, National Association, which provides various financial products and services in the United States, Canada, and the United Kingdom. It operates through three segments: Credit Card, Consumer Banking, and Commercial Banking. The company accepts checking accounts, money market deposits, negotiable order of withdrawals, savings deposits, and time deposits.

Capital One Financial Corporation Fundamentals Summary

How do Capital One Financial's earnings and revenue compare to its market cap?
COF fundamental statistics
Market CapUS$35.38b
Earnings (TTM)US$9.55b
Revenue (TTM)US$30.55b

3.7x

P/E Ratio

1.2x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
COF income statement (TTM)
RevenueUS$30.55b
Cost of RevenueUS$0
Gross ProfitUS$30.55b
Other ExpensesUS$21.00b
EarningsUS$9.55b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)24.88
Gross Margin100.00%
Net Profit Margin31.26%
Debt/Equity Ratio116.4%

How did COF perform over the long term?

See historical performance and comparison

Dividends

2.6%

Current Dividend Yield

10%

Payout Ratio