Five Takeaways From Capital One's Earnings
Capital One Is Cheap, But Earnings Growth Is Uncertain
Capital One Warrants A Closer Look
Terrier Investing • 22 Comments
Terrier Investing • 22 Comments
Thu, Jul. 21, 4:20 PM
- Q2 adjusted net income of $979M or $1.76 per share vs. $863M and $1.50 one year ago.
- Provisions up 4% for the quarter to $1.6B. Net charge-offs of $1.2B, reserve build of $465M.
- Net interest margin of 6.73 down two basis points.
- Period-end loans held for investment up 3% to $234.6B. Domestic card loans up 5% to $88.6B. Consumer banking loans up 1% to $71.4B - auto loans up 4% to $44.5B, home loans down 4% to $23.4B. Commercial loans up 3% to $66.2B.
- Earnings call at 5 ET
- Previously: Capital One Financial misses by $0.10, misses on revenue (July 21)
- COF flat after hours
Thu, Jul. 21, 4:09 PM
Wed, Jul. 20, 5:35 PM
Fri, Jul. 15, 10:10 AM
- Wells Fargo ticks off 20 S&P 500 stocks with the most upside potential vs. consensus, and the 20 with the most downside risk vs. consensus.
- The list is compiled by comparing the midpoint of Wells Fargo Securities valuation ranges to consensus fair value estimates, volatility adjusting the percentage difference, and ranking the resulting score.
- Upside: AEE, BEN, CCL, DVA, EIX, ES, EXC, FTR, HUM, INTC, JNJ, LNT, PEG, PNW, SCG, T, WEC, WU, XEL, XOM.
- Downside: ANTM, C, CI, COF, EQT, FOXA, FSLR, GS, KIM, LH, MON, MSI, MYL, NVDA, NWSA, SLG, TIF, TSO, UA, WLTW.
Fri, Jul. 8, 9:44 AM
- Capital One Financial (NYSE:COF) is up 4.1% after a D.A. Davidson upgrade to Buy, amid credit concerns that are "overdone" and an improving environment for card losses.
- The firm's Arren Cyganovich has a price target of $76 on shares, implying 18% upside from today's higher price.
- Unemployment that is the main driver of credit card losses "continues to be very benign as highlighted by weekly jobless claims," Cyganovich writes (and nonfarm payrolls pulled off a strong beat on jobs added this morning, with unemployment sitting at 4.9%).
- It's an extended positive cycle for credit cards, and delinquency data suggests seasonal improvements are likely from here.
- Capital One has managed card loan growth above peers at 12.9%, though it could slow to as much as 8% in 2017.
Tue, Jul. 5, 4:17 PM
- Interest rates continue to plummet, with U.S. government yields on the long end hitting new all-time lows. At least they remain positive (for now). Yields on French government paper are now negative all the way out to nine years, and Swiss 50-year bonds now sport yields below zero.
- Some hawkish words today from San Francisco Fed President Williams weren't enough to lift the share prices of yield-starved financials (XLF -1.5%).
- The SPDR KBW Bank ETF (KBE -3%), the SPDR KBW Regional Bank ETF (KRE -3%)
- Citigroup (C -3.3%), Morgan Stanley (MS -3.5%), Regions Financial (RF -3.9%), Fifth Third (FITB -4.2%), Capital One (COF -3.3%), Legg Mason (LM -3.3%), E*Trade (ETFC -3.2%), Schwab (SCHW -3%), MetLife (MET -4.2%), Prudential (PRU -3.2%), Lincoln (LNC -4.5%)
Wed, Jun. 29, 5:26 PM
- Capital One Financial's (NYSE:COF) CCAR is approved by the Fed. The company will keep its quarterly dividend unchanged at $0.40/share.
- In addition, the company has authorized the repurchase of up to $2.5B of the company's common stock beginning in the Q3'16 through the end of the Q2'17.
- Shares +1% AH.
Thu, Jun. 23, 4:51 PM
- Ally Financial (NYSE:ALLY): Actual end of 2015 CET1 ratio of 9.2%, Q1 2018 CET1 ratio under severely adverse scenario of 6.1%, minimum 6.1%.
- American Express (NYSE:AXP): Actual 12.4%, Q1 2018 12.3%, minimum 11.4%.
- Bank of America (NYSE:BAC): Actual 11.6%, Q1 2018 8.1%, minimum 8.1%.
- BNY Mellon (NYSE:BK): Actual 11.5%, Q1 2018 11.2%; minimum 10.5%.
- BB&T (NYSE:BBT): 10.3%, 6.9%, 6.9%
- BBVA Compass (NYSE:BBVA): 10.7%, 6.5%, 6.5%.
- BMO Financial (NYSE:BMO): 11.9%, 5.9%, 5.9%.
- Capital One (NYSE:COF): 11.1%, 8.2%, 8.2%.
- Citigroup (NYSE:C): 15.3%, 9.2%, 9.2%.
- Citizens Financial (NYSE:CFG): 11.7%, 8.8%, 8.8%.
- Comerica (NYSE:CMA): 10.5%, 8.3%, 8.3%.
- Discover (NYSE:DFS): 13.9%, 12.4%, 11.9%.
- Fifth Third (NASDAQ:FITB): 9.8%, 6.8%, 6.8%.
- Goldman Sachs (NYSE:GS): 13.6%, 10.2%, 8.4%.
- HSBC N.A. (NYSE:HSBC): 15.7%, 9.1%, 9.1%.
- Huntington Bancshares (NASDAQ:HBAN): 9.8%, 5%, 5%.
- JPMorgan (NYSE:JPM): 12%, 8.3%, 8.3%.
- KeyCorp (NYSE:KEY): 10.9%, 6.4%, 6.4%.
- M&T (NYSE:MTB): 11.1%, 6.9%, 6.9%.
- Morgan Stanley (NYSE:MS): 16.4%, 10%, 9.1%.
- Northern Trust (NASDAQ:NTRS): 10.8%, 9.6%, 9.6%.
- PNC Financial (NYSE:PNC): 10.6%, 7.6%, 7.6%.
- Regions (NYSE:RF): 10.9%, 7.3%, 7.3%.
- Santander Holdings (NYSE:SAN): 12%, 11.8%, 11.8%
- State Street (NYSE:STT): 13%, 9.6%, 9.6%
- SunTrust (NYSE:STI): 10%, 7.5%, 7.5%.
- TD Group (NYSE:TD): 13.1%, 8.4%, 8.4%.
- U.S. Bancorp (NYSE:USB): 9.6%, 7.5%, 7.5%.
- Wells Fargo (NYSE:WFC): 11.1%, 7.2%, 7.2%.
- Zions (NASDAQ:ZION): 12.2%, 6.6%, 6.6%.
- Previously: All 33 banks pass this year's stress tests (June 23)
Wed, Jun. 15, 8:35 AM
- Capital One's (NYSE:COF) May's net charge-off rate for domestic cards of 3.99% fell from 4.29% in April. The 30+ day performing delinquency rate of 3.01% rose from 2.96%.
- For auto loans, the net charge-off rate of 1.17% rose from 0.95%. The 30+ day performing delinquency rate of 5.48% rose from 4.99%.
- The company is presenting later this morning at a financial services conference, and listeners will be interested in hearing what the company has to see given Synchrony Financial's credit warning yesterday, which helped bring CapOne lower by more than 6%.
Tue, Jun. 14, 1:01 PM
Tue, Jun. 14, 12:20 PM
- In conjunction with CFO Brian Doubles' appearance at a conference this morning, the company said it expects a 20-30 basis point increase in net charge off rates over the next year.
- BTIG's Mark Palmer notes Doubles says Synchrony (SYF -14.3%) continues to see the credit environment as "benign," though management anticipates "softening" in customers' ability to pay off balances. Palmer also says credit metrics currently are at unusually low (good) levels, and "normalization" should be expected at this point in the cycle.
- There's also a positive catalyst on the horizon in the CCAR results, at which Palmer expects the initiation of buybacks and a dividend.
- He reiterates his Buy rating, with $42 price target (60% upside) based off of 12.5x 2018 estimated EPS of $3.33.
- Discover (DFS -3.1%), Capital One (COF -6%), American Express (AXP -3.9%), OneMain Holdings (OMF -7.3%), Santander Consumer (SC -5.5%), Ally Financial (ALLY -2.9%)
Tue, Jun. 14, 9:59 AM
- Synchrony Financial is down more than 8% after warning of an increase in charge-off rates over the next year.
- Capital One (COF -2.8%), Discover (DFS -1.1%), American Express (AXP -1.6%).
- Releasing its monthly statistics, Discover says its net principal charge-off rate in May was 2.4%, down 10 basis points from April, but up from the cycle low of 1.9% from last July. The delinquency over the last 30 days was 1.6%, flat from April and from last summer.
Wed, Jun. 8, 12:51 PM
- An outlier to the downside among the credit card names today is Capital One (COF -1.2%) after Sterne Agee downgrades to Underperform from Neutral.
- Cited by analyst Henry Coffey are ongoing business line challenges, rising credit costs thanks to energy, lower spreads in auto lending, and long-term branch structural issues.
Thu, Jun. 2, 12:20 PM
- "Auto is clearly a little stretched, in my opinion," says JPMorgan (JPM -0.3%) CEO Jamie Dimon, speaking at a conference. "Someone is going to get hurt... we don't do much of that."
- Speaking at the same conference, U.S. Bancorp (USB -0.3%) CEO Richard Davis calls the auto loan market "overheated" thanks to pricing competition .“It’s a business you have to watch through the cycles, and right now it is probably at its least attractive. But in what could be a day, a month or a year, it could be very attractive.”
- Interested players: COF, SC, ALLY, CACC
Fri, May 20, 9:18 AM
- U.S. credit card balances are on track to climb over $1T this year, closing in on the all-time high of $1.02T set just before things fell completely apart in 2008.
- Slow, but steady economic growth, an improving job market, and lenders returning to offering credit to millions of subprime consumers are behind the numbers.
- Lenders will take it where they can get it, as credit cards are one of the few areas working for banks right now, thanks to low margins on ordinary lending and a secular decline in trading profits. For now, delinquency rates are low, and profits are set to rise even more alongside Fed rate hikes.
- Capital One's (NYSE:COF) strategy to boost card usage by raising spending limits and giving out new cards is paying off: The bank's customers spent 20% more on cards in Q1 this year than last. For Citigroup (NYSE:C), average balances posted their first Y/Y increase since 2008. Balances grew at Discover (NYSE:DFS) and JPMorgan (NYSE:JPM) as well.
- Even American Express (NYSE:AXP), whose customers typically pay it all off every month, is now focusing on lending to those who will keep a balance.
- Source: The WSJ's Annamaria Andriotis and Robin Sidel
Wed, May 18, 1:08 PM
- The meme of rates lower for longer has been stood on its head in the last 24 hours thanks to some decent economic data, but also surprisingly hawkish Fedspeak yesterday.
- The fixed-income world now believes remarks from the Fed's Williams and Lockhart yesterday may have been a preview of what we'll get when the real power speaks tomorrow - Fischer and Dudley - and then on May 27, when Janet Yellen gives a speech.
- Up at 2 ET are the minutes from the FOMC's April meeting.
- The 10-year yield is higher by five basis points to 1.82% and short-term rate markets have upped expectations for a Fed move this year.
- XLF +1.85%, KBE +3.15%, KRE +3.3%
- Bank of America (BAC +3.7%), Citigroup (C +4.2%), JPMorgan (JPM +3.2%), Wells Fargo (WFC +2.1%), U.S. Bancorp (USB +2.1%), Regions (RF +3.3%), KeyCorp (KEY +3.7%), PNC Financial (PNC +2.7%), Fifth Third (FITB +3.7%), Capital One (COF +1.9%), E*Trade (ETFC +4.4%), Schwab (SCHW +4.8%), MetLife (MET +2.9%), Prudential (PRU +3.4%), Lincoln National (LNC +4.2%), BNY Mellon (BK +2.3%), Northern Trust (NTRS +2.9%)
Capital One Financial Corp. is a financial holding company operating through its subsidiaries, which include Capital One, NA and Capital One Bank USA, NA. It offers financial products and services to consumers, small businesses and commercial clients. The company operates through three segments:... More
Industry: Credit Services
Country: United States
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