Capital One (COF) outpaces stock market gains: what you need to know


IIn the last trading session, Capital One (COF) closed at $135.88, marking a +0.6% move from the previous day. The stock topped the S&P 500 daily gain of 0.51%. Elsewhere, the Dow gained 0.44%, while the tech-heavy Nasdaq gained 0.19%.

As today approached, shares of the credit card issuer and bank had lost 8.59% in the past month, lagging the financial sector’s 3.68% gain and of the 5.51% gain in the S&P 500 during this period.

Wall Street will be looking for positivity from Capital One as it nears its next earnings report date. On that day, Capital One is expected to report earnings of $5.51 per share, which would represent a 21.62% year-over-year decline. Meanwhile, our latest consensus estimate calls for revenue of $8 billion, up 12.52% from the prior year quarter.

For the full year, our Zacks consensus estimates call for earnings of $20.20 per share and revenue of $33.14 billion, which would represent swings of -25.05% and +8, 89%, respectively, compared to the previous year.

It’s also important to note recent changes to analyst estimates for Capital One. These revisions help show the ever-changing nature of short-term trading trends. Therefore, we can interpret positive estimate revisions as a good sign for the company’s business outlook.

Research indicates that these revisions to estimates are directly correlated to near-term stock price dynamics. To benefit from this, we have developed the Zacks Rank, a proprietary model that takes into account these estimation changes and provides an actionable rating system.

The Zacks ranking system ranges from #1 (strong buy) to #5 (strong sell). It has a remarkable track record of third-party audited success, with #1 stocks offering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has fallen 0.09% . Capital One currently sports a Zacks rank of #3 (Hold).

Valuation is also important, so investors should note that Capital One has a Forward P/E ratio of 6.69 at this time. This represents a discount to the average PER of its sector of 7.22.

It should also be noted that the COF currently has a PEG ratio of 0.41. The PEG ratio is similar to the widely used P/E ratio, but this measure also takes into account the company’s expected earnings growth rate. Financials – Consumer lending stocks hold an average PEG ratio of 0.33 based on yesterday’s closing prices.

The Financial – Consumer Credit industry is part of the Finance sector. This industry currently has a Zacks Industry Rank of 164, which places it in the bottom 36% of all 250+ industries.

The Zacks Industry Ranking assesses the strength of our industry groups by measuring the average Zacks Ranking of individual stocks within the groups. Our research shows that the top 50% of industries outperform the bottom half by a factor of 2 to 1.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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