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1. Company Snapshot

1.a. Company Description

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.


Its loan products include credit card loans; auto and retail banking loans; and commercial and multifamily real estate, and commercial and industrial loans.The company also offers credit and debit card products; online direct banking services; and treasury management and depository services.It serves consumers, small businesses, and commercial clients through digital channels, branches, cafés, and other distribution channels located in New York, Louisiana, Texas, Maryland, Virginia, New Jersey, and California.


Capital One Financial Corporation was founded in 1988 and is headquartered in McLean, Virginia.

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1.b. Last Insights on COF

Capital One Financial Corporation's recent performance was negatively impacted by its Q4 earnings miss, primarily due to rising expenses and provisions. The company's acquisition of fintech firm Brex for $5.15 billion has added pressure on shares. Despite a 54% year-over-year surge in net interest income, driven by the Discover Financial acquisition, concerns over outsized credit card exposure and potential default risks have arisen. Additionally, investments in technology, AI, and premium cards are expected to exert short-term margin pressure. Burney Co. and Acadian Asset Management LLC have reduced their stakes in the company.

1.c. Company Highlights

2. Capital One's Earnings Report: A Deeper Dive into the Numbers

Capital One Financial Corporation reported adjusted earnings per share of $3.86 for the fourth quarter of 2025, slightly missing analyst estimates of $4.14. The company's net income stood at $2.1 billion, or $3.26 per diluted common share. The net interest margin was 8.26%, a decrease of 10 basis points from the prior quarter. Revenue growth was driven primarily by the addition of Discover purchase volume, with year-over-year purchase volume growth of 39% in its credit card business.

Publication Date: Jan -25

📋 Highlights
  • Q4 2025 Earnings:: Capital One reported $2.1 billion ($3.26 per share) in Q4 and $2.5 billion ($4.30 per share) for the full year 2025.
  • Portfolio Sale Gain:: The $8.8 billion Discover home loans portfolio sale generated a $483 million net gain.
  • Credit Loss Provision:: Provision for credit losses rose $1.4 billion QoQ to $4.1 billion, driven by a $302 million allowance build and $360 million increase in net charge-offs.
  • Brex Acquisition:: Capital One acquired Brex for $5.15 billion to expand its small business payments platform, despite initial earnings dilution (capital ratio dropped 10 bps to 14.3%).
  • Credit Card Growth:: Purchase volume grew 39% YoY (6.2% excluding Discover), with a domestic charge-off rate of 4.93% (up 30 bps QoQ, down 113 bps YoY).

Financial Performance

The company's provision for credit losses was $4.1 billion, up $1.4 billion from the third quarter, driven by an allowance build of $302 million and a $360 million increase in net charge-offs. The allowance balance stood at $23.4 billion, with a total portfolio coverage ratio of 5.16%. The domestic card charge-off rate was 4.93%, up 30 basis points from the prior quarter, but down 113 basis points from a year ago.

Strategic Moves

The company announced an agreement to acquire Brex for $5.15 billion, a pioneer in the business payment space with industry-leading technology and talent. The acquisition is expected to create purchase accounting impacts but will not affect the Discover integration or expected synergies. The deal is expected to enhance the company's platform in the small business space, particularly with its network, and create a more comprehensive solution for business payments.

Valuation

With a Price-to-Tangible Book Value (P/TBV) ratio of approximately 1.22, and a Dividend Yield of 1.2%, the stock appears to be reasonably valued. Considering the company's Net Interest Margin (NIM) of 8.26%, the valuation seems to be in line with industry standards. Analysts estimate next year's revenue growth at 5.5%, which could potentially drive the stock price higher.

Regulatory Environment

The discussion also touched on regulatory issues, including a proposed 10% credit card cap and the Credit Card Competition Act. The executives believe that such regulations could have unintended consequences, such as reduced credit availability and economic shocks. The company's management is cautiously optimistic about the future, citing a resilient US consumer and overall macro economy.

Growth Prospects

The acquisition of Brex is expected to provide a growth platform for Capital One Financial Corporation. The deal's financial impacts include purchase price and associated balance sheet marks and integration costs. The company believes it can pursue this growth opportunity while integrating Discover, as the business areas impacted are different. The efficiency ratio is expected to improve through revenue growth, which is the engine of the company's efficiency journey.

3. NewsRoom

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Capital One Announces Quarterly Dividend

13:05

Source: businesswire.com

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Capital One Financial Corporation $COF Shares Sold by Convergence Investment Partners LLC

08:22

Source: defenseworld.net

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Capital One Financial Corporation $COF Shares Purchased by Meridian Wealth Management LLC

Feb -02

Source: defenseworld.net

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BREAKING: Trump's credit card cap push puts pressure on AmEx earnings

Jan -30

Source: youtube.com

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Keep Calm And Buy High Quality Dividends

Jan -30

Source: seekingalpha.com

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Capital One Stock Weak After Earnings, Brex Deal in Focus

Jan -29

Source: marketbeat.com

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2 Bank Stocks That Could Soar in 2026

Jan -29

Source: fool.com

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INVESTOR ALERT: Pomerantz Law Firm Investigates Claims On Behalf of Investors of Capital One Financial Corporation - COF

Jan -29

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.12%)

6. Segments

Credit Card

Expected Growth: 6.0%

The 6.0% growth in Capital One Financial Corporation's credit card segment is driven by increased consumer spending, higher interest rates, and a growing customer base. Additionally, the company's investments in digital transformation and personalized marketing efforts have likely contributed to the growth, as well as a favorable macroeconomic environment with low unemployment and rising consumer confidence.

Consumer Banking

Expected Growth: 3.5%

Consumer Banking growth at Capital One Financial Corporation is driven by 3.5% increase in credit card loans, 4.2% rise in auto loans, and 2.8% growth in mortgages. Additionally, digital adoption and fee income contribute to the segment's growth, reflecting the company's diversified business model and strong consumer franchise.

Commercial Banking

Expected Growth: 4.5%

Commercial Banking growth at Capital One Financial Corporation is driven by 4.5% increase in loans, 3.2% rise in deposits, and 2.1% improvement in net interest margin. Additionally, efficiency gains from digital transformation and strategic investments in commercial banking capabilities have contributed to the segment's growth.

Other

Expected Growth: 2.0%

The growth of 'Other' segment at Capital One Financial Corporation is driven by increasing fee-based revenue streams, including interchange fees, transaction fees, and other non-interest income sources. This segment's 2.0% growth likely results from expanding payment processing volumes, enhanced customer engagement, and strategic partnerships, contributing to the company's diversified revenue base.

7. Detailed Products

Credit Cards

Capital One offers a wide range of credit cards, including cashback, rewards, and travel cards, with features such as no foreign transaction fees, chip-enabled cards, and mobile payment options.

Auto Loans

Capital One provides auto loans for new and used vehicles, with competitive interest rates, flexible repayment terms, and online account management.

Personal Loans

Capital One offers personal loans with fixed interest rates, flexible repayment terms, and no origination fees, for debt consolidation, home improvements, and unexpected expenses.

Home Loans

Capital One provides home loans, including mortgages and home equity loans, with competitive interest rates, flexible repayment terms, and online account management.

Business Banking

Capital One offers business banking solutions, including checking accounts, savings accounts, and cash flow management tools, for small businesses and commercial clients.

Deposit Products

Capital One offers deposit products, including checking accounts, savings accounts, and certificates of deposit (CDs), with competitive interest rates and online account management.

8. Capital One Financial Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Capital One Financial Corporation operates in the financial services industry, specifically in banking and credit cards. The threat of substitutes is relatively low as customers are generally loyal to their banks and credit card providers, and switching costs are high. Additionally, Capital One's diversified product offerings and strong brand recognition reduce the likelihood of customers switching to substitutes.

Bargaining Power Of Customers

Capital One's customers have some bargaining power due to the availability of multiple financial services providers in the market. However, the company's strong brand reputation, user-friendly online platforms, and competitive pricing mitigate the bargaining power of customers. Customers can choose from various financial products and services, but they also value the convenience and reliability offered by Capital One.

Bargaining Power Of Suppliers

Capital One has a large and diversified supplier base, which reduces the bargaining power of individual suppliers. The company also has a strong brand and significant market share, which gives it negotiating power with suppliers. Furthermore, the financial services industry has a relatively low dependence on specific suppliers, which further reduces the bargaining power of suppliers.

Threat Of New Entrants

The threat of new entrants is moderate in the financial services industry, particularly in banking and credit cards. While there are regulatory barriers to entry, such as capital requirements and licensing, the industry has seen new entrants in the form of fintech companies and digital banks. However, Capital One's established brand, extensive customer base, and significant resources provide a competitive advantage against new entrants.

Intensity Of Rivalry

The financial services industry, particularly banking and credit cards, is highly competitive. Capital One competes with large banks, such as JPMorgan Chase, Bank of America, and Wells Fargo, as well as with fintech companies and digital banks. The competition is intense, with companies competing on pricing, product offerings, and customer experience. Capital One's strong brand and diversified product offerings help it compete effectively, but the intensity of rivalry remains high.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 42.53%
Debt Cost 41.03%
Equity Weight 57.47%
Equity Cost 9.81%
WACC 23.09%
Leverage 74.01%

11. Quality Control: Capital One Financial Corporation passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Barings BDC

A-Score: 6.8/10

Value: 6.4

Growth: 4.7

Quality: 6.1

Yield: 10.0

Momentum: 3.5

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Discover

A-Score: 6.2/10

Value: 6.6

Growth: 7.8

Quality: 7.8

Yield: 3.0

Momentum: 7.5

Volatility: 4.3

1-Year Total Return ->

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Stock-Card
Visa

A-Score: 5.9/10

Value: 0.8

Growth: 7.8

Quality: 8.8

Yield: 1.0

Momentum: 7.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Amex

A-Score: 5.8/10

Value: 3.0

Growth: 6.3

Quality: 6.9

Yield: 2.0

Momentum: 8.0

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
Capital One

A-Score: 5.5/10

Value: 4.1

Growth: 6.3

Quality: 5.4

Yield: 3.0

Momentum: 7.0

Volatility: 7.0

1-Year Total Return ->

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Stock-Card
PayPal

A-Score: 4.9/10

Value: 6.2

Growth: 7.6

Quality: 7.2

Yield: 0.0

Momentum: 2.5

Volatility: 6.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

220.0$

Current Price

220$

Potential

-0.00%

Expected Cash-Flows