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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 driven by strong Q3 earnings, with quarterly earnings of $5.95 per share beating estimates. The company's robust capital position supports a $16 billion buyback program and a 33% dividend increase. Its credit performance remains strong, with underlying credit trends and conservative capital stance providing confidence in stability. The integration of Discover progresses smoothly. Wall Street analysts have revised earnings estimates higher, indicating a trend reversal. (Source: Capital One: Credit Delivers A Q3 Blowout, rating upgrade)

1.c. Company Highlights

2. Capital One's Q3 2025 Earnings: A Strong Performance Driven by Discover Acquisition

Capital One's Q3 2025 earnings were $3.2 billion, or $4.83 per diluted common share. After adjusting for items related to the Discover acquisition, earnings per share were $5.95, significantly beating estimates of $4.49. Revenue increased $2.9 billion, or 23%, compared to Q2, driven by the full quarter effect of the Discover acquisition. The net interest margin was 8.36%, up 74 basis points from Q2, indicating a strong improvement in the company's ability to generate income from its assets.

Publication Date: Nov -25

📋 Highlights
  • Adjusted Earnings Surge: Adjusted EPS reached $5.95, up $1.12 from $4.83, driven by Discover acquisition integration.
  • Revenue Surge: Revenue jumped 23% to $2.9B higher YoY, fueled by full-quarter Discover acquisition effects.
  • Margin Expansion: Net interest margin rose 74 bps to 8.36%, reflecting strong loan growth and pricing discipline.
  • Capital Return Boost: $16B stock buyback authorization and dividend hike to $0.80/share, signaling confidence.
  • Credit Resilience: Charge-offs fell 98 bps to 4.63%, with $760M allowance release from improved credit trends.

Segment Performance

The Domestic Card segment saw a $753 million allowance release, driven by credit favorability and a slight improvement in the forecasted unemployment rate. The Consumer Banking segment's allowance balance was largely flat, while the Commercial Banking segment released $37 million of allowance. The company's total portfolio coverage ratio decreased to 5.21%, indicating a reduction in the overall risk profile of its portfolio.

Capital Management and Return

The company completed a capital assessment, which showed a long-term capital need of 11%. The Board of Directors approved a new repurchase authorization of up to $16 billion of common stock and a quarterly common stock dividend increase from $0.60 to $0.80 per share. The company has stepped up its repurchase pace, with $1 billion in share buybacks in Q3, indicating a commitment to returning capital to shareholders.

Valuation and Outlook

With a Price-to-Tangible Book Value (P/TBV) ratio of around 1.17, and a Dividend Yield of 1.24%, the stock appears to be reasonably valued. Analysts estimate next year's revenue growth at 18.4%, indicating a positive outlook for the company's future performance. The Discover integration is on track, with expected synergies of $2.5 billion, and the company is investing in growth vectors, including AI-driven experiences, to drive future growth.

Risk Management and Credit Performance

Capital One's charge-off rate was 4.63%, down 98 basis points from a year ago, with 19 basis points of that decline due to the integration of the Discover Card portfolio. The company's delinquencies remain a leading indicator of near-term credit performance and have moved in line with normal seasonality. The company's credit discipline and risk management practices have contributed to a stable credit performance.

3. NewsRoom

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Capital One Car Buying Outlook finds nearly 70% of Car Buyers View Dealers as Trustworthy

Dec -04

Source: prnewswire.com

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Outside Inc. Announces Festival Headliners for Third Annual ‘Outside Days' Presented by Capital One and REI Co-op

Dec -03

Source: businesswire.com

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Capital One Financial Corporation $COF Stock Holdings Boosted by 1832 Asset Management L.P.

Dec -03

Source: defenseworld.net

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Ameritas Investment Partners Inc. Purchases 2,405 Shares of Capital One Financial Corporation $COF

Nov -28

Source: defenseworld.net

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Clarkston Capital Partners LLC Reduces Stake in Capital One Financial Corporation $COF

Nov -28

Source: defenseworld.net

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Capital One vs. Synchrony: Which Credit Card Lender is a Better Pick?

Nov -27

Source: zacks.com

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Boston Partners Takes Position in Capital One Financial Corporation $COF

Nov -26

Source: defenseworld.net

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AlphaCore Capital LLC Has $231,000 Position in Capital One Financial Corporation $COF

Nov -26

Source: defenseworld.net

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
Discover

A-Score: 6.8/10

Value: 6.2

Growth: 7.8

Quality: 7.7

Yield: 3.0

Momentum: 8.5

Volatility: 7.7

1-Year Total Return ->

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Stock-Card
Barings BDC

A-Score: 6.8/10

Value: 6.4

Growth: 5.1

Quality: 6.3

Yield: 10.0

Momentum: 3.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Visa

A-Score: 6.1/10

Value: 0.8

Growth: 7.8

Quality: 8.8

Yield: 1.0

Momentum: 8.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Capital One

A-Score: 5.9/10

Value: 4.4

Growth: 6.3

Quality: 6.3

Yield: 3.0

Momentum: 8.5

Volatility: 6.7

1-Year Total Return ->

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Stock-Card
Amex

A-Score: 5.5/10

Value: 2.4

Growth: 6.6

Quality: 6.9

Yield: 2.0

Momentum: 7.0

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
PayPal

A-Score: 4.8/10

Value: 5.1

Growth: 7.7

Quality: 7.3

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

230.68$

Current Price

230.68$

Potential

-0.00%

Expected Cash-Flows