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McLean, Virginia-based Capital One Financial Corporation (COF) focuses on consumer and commercial lending and deposit origination. Its subsidiaries provide financial products and services to consumers, small businesses, and commercial clients. With a market cap of $58.3 billion, Capital One’s operations span the U.S., Canada, and the U.K. The financial services giant is expected to release its Q3 earnings after the market closes on Thursday, Oct. 24.
Ahead of the event, analysts expect Capital One to report a profit of $3.69 per share, down 17.1% from $4.45 per share reported in the year-ago quarter. The company has missed Wall Street’s adjusted EPS projection thrice over the past four quarters while exceeding on one other occasion. Its adjusted EPS for the last reported quarter dipped 10.8% year-over-year to $3.14 and missed the consensus estimates by 4.3%.
For fiscal 2024, analysts expect Capital One to report an adjusted EPS of $12.88, up 2.9% from $12.52 in fiscal 2023. In fiscal 2025, its EPS is expected to grow 22.7% year-over-year to $15.80.
COF has gained 17% on a YTD basis, underperforming the S&P 500 Index’s ($SPX) 20.6% gains and the Financial Select Sector SPDR Fund’s (XLF) 21.4% returns during the same time frame.
Despite missing Wall Street’s topline and bottom-line estimates, shares of Capital One gained marginally after the release of its Q2 earnings on Jul. 23. Its net interest income grew by 6.1%, totaling $7.5 billion. However, a massive 57% increase in provision for credit losses to $3.9 billion led to a 60.7% year-over-year drop in net income to $531 million.
Amid these challenges, Capital One demonstrated operational efficiency with a 117-basis point improvement in its efficiency ratio, bringing it down to 52.03%. The upcoming strategic acquisition of Discover is anticipated to further bolster Capital One’s market presence, unlocking new avenues for growth.
The consensus opinion on COF stock is moderately bullish, with an overall “Moderate Buy” rating. Out of the 20 analysts covering the stock, seven recommend “Strong Buy,” one advocates “Moderate Buy,” and 12 suggest “Hold” rating.
The mean price target of $161.56 suggests a potential upside of 5.3% from current price levels.
On the date of publication, Aditya Sarawgi 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.
