What To Expect From Capital One Stock?

+8.42%
Upside
138
Market
150
Trefis
COF: Capital One Financial logo
COF
Capital One Financial

Capital One’s stock (NYSE: COF) has gained 22% YTD, as compared to the 19% increase in the S&P500 over the same period. Further, at its current price of $113 per share, the stock is trading 4% below its fair value of $118 – Trefis’ estimate for Capital One’s valuationThe company posted mixed results in the second quarter of 2023, with the earnings beating the consensus estimates but revenues missing the mark. It reported total revenues of $9.01 billion – up 9% y-o-y, mainly driven by an 11% rise in the noninterest revenues and a 9% growth in the net interest income (NII). The NII mainly benefited from an increase in the total outstanding loans, partially offset by a slight drop in the net interest margin. On the expense front, the provisions for credit losses witnessed an unfavorable increase from $1.08 billion to $2.49 billion. It eroded all the positive effects of growth in the top line and resulted in an adjusted net income of $1.35 billion – down 31% y-o-y.

The top line improved 9% y-o-y to $17.92 billion in the first half of FY 2023, driven by an 11% rise in the net interest income and a 4% growth in the non-interest revenues. The NII was up due to higher average interest-earning assets and improvement in the net interest margin (for the first two-quarters). That said, the provisions figure jumped almost 200% from $1.76 billion to $5.28 billion. Overall, it led to a 48% y-o-y drop in the adjusted net income to $2.24 billion. 

Moving forward, we expect the Q3 results to follow the same trend as the second quarter. AltogetherCapital One revenues are forecast to touch $36.55 billion in FY2023. Additionally, COF’s net income margin is likely to decline from 20.6% to 12.6% in the year, leading to an adjusted net income of $4.61 billion and an annual GAAP EPS of $12.45. This coupled with a P/E multiple of just above 9x will lead to a valuation of $118.

Relevant Articles
  1. Capital One Stock Is Trailing S&P500 By 8% YTD, What To Expect?
  2. Capital One Stock Gained 44% In The Last 6 Months, What’s Next?
  3. Up 40% Since The Beginning Of 2023, How Will Capital One Stock Trend After Q4 Earnings
  4. Up 25% Since The Beginning Of 2023, Will Capital One Stock Continue To Rally?
  5. Capital One Stock Gained 14% YTD And Outperformed The Estimates In Q3
  6. Capital One Missed The Consensus In Q1, What’s Next?

What if you’re looking for a portfolio that aims for long-term growth? Here’s a value portfolio that’s done much better than the market since 2016.

 Returns Aug 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 COF Return -3% 22% 30%
 S&P 500 Return 0% 19% 104%
 Trefis Multi-Strategy Portfolio -2% 26% 304%

[1] Month-to-date and year-to-date as of 8/3/2023
[2] Cumulative total returns since the end of 2016

Invest with Trefis Market Beating Portfolios
See all Trefis Price Estimates