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Capital One (COF) Up 4.4% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Capital One (COF - Free Report) . Shares have added about 4.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Capital One due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Capital One’s Q4 Earnings Beat on Higher NII & Fee Income, Provisions Dip
Capital One’s fourth-quarter 2024 adjusted earnings of $3.09 per share handily surpassed the Zacks Consensus Estimate of $2.66. The bottom line also compared favorably with $2.24 in the prior-year quarter.
Results gained from higher net interest income (NII) and non-interest income and rise in loans and deposits. Also, provisions declined during the quarter. However, the increase in expenses was the undermining factor.
Results excluded certain non-recurring items, including charges related to Discover Financial integration. After considering these, net income available to common shareholders was $1.02 billion or $2.67 per share, up from $639 million or $1.67 per share in the prior-year quarter. Our estimate for the metric was $924 million.
For 2024, adjusted earnings were $13.96, beating the consensus estimate of $13.53 and rising 12% year over year. Net income available to common shareholders (GAAP) was $4.45 billion or $11.59 per share, down from $4.82 billion or $11.95 per share in 2023.
Revenues Improve, Expenses Rise
Total net revenues for the quarter were $10.19 billion, up 7% from the prior-year quarter. The top line surpassed the Zacks Consensus Estimate of $10.16 billion.
For 2024, total net revenues grew 6% to $39.1 billion. The top line also outpaced the consensus estimate of $39.08 billion.
NII increased 8% year over year to $8.1 billion. NIM expanded 30 basis points (bps) to 7.03%. Our estimates for NII and NIM were $7.92 billion and 6.98%, respectively.
Non-interest income of $2.09 billion grew 5%. The rise was driven by higher service charges and other customer-related fees, and net interchange fees. Our estimate for non-interest income was $2.06 billion.
Non-interest expenses were $6.09 billion, up 7% year over year. The rise was due to an increase in almost all cost components except the amortization of intangibles cots and other expenses. We expected the metric to be $5.97 billion. Adjusted expenses were $5.87 billion, up 8%.
The efficiency ratio was 59.75%, down from 60.14% in the year-ago quarter. A fall in the efficiency ratio indicates an improvement in profitability.
As of Dec. 31, 2024, loans held for investment were $327.8 billion, up 2% from the prior-quarter end. Total deposits were $362.7 billion, rising 3%. Our estimates for loans held for investment and total deposits were $316.4 billion and $362.6 billion, respectively.
Credit Quality: A Mixed Bag
Provision for credit losses was $2.64 billion in the reported quarter, down 8% from the prior-year quarter. We anticipated provisions of $2.77 billion.
The 30-plus-day-performing delinquency rate fell 2 bps year over year to 3.69%. However, the net charge-off rate jumped 38 bps to 3.59%. Allowance, as a percentage of reported loans held for investment, was 4.96%, up 19 bps year over year.
Capital & Profitability Ratios Improve
As of Dec. 31, 2024, the Tier 1 risk-based capital ratio was 14.8%, up from 14.2% a year ago. The common equity Tier 1 capital ratio was 13.5%, improving from 12.9%.
At the end of the fourth quarter, the return on average assets was 0.90%, up from 0.60% in the year-ago period. Return on average common equity was 7.16%, up from 5.03%.
Share Repurchase Update
During the reported quarter, the company repurchased 0.88 million shares for $150 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, Capital One has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Capital One has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Capital One (COF) Up 4.4% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Capital One (COF - Free Report) . Shares have added about 4.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Capital One due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Capital One’s Q4 Earnings Beat on Higher NII & Fee Income, Provisions Dip
Capital One’s fourth-quarter 2024 adjusted earnings of $3.09 per share handily surpassed the Zacks Consensus Estimate of $2.66. The bottom line also compared favorably with $2.24 in the prior-year quarter.
Results gained from higher net interest income (NII) and non-interest income and rise in loans and deposits. Also, provisions declined during the quarter. However, the increase in expenses was the undermining factor.
Results excluded certain non-recurring items, including charges related to Discover Financial integration. After considering these, net income available to common shareholders was $1.02 billion or $2.67 per share, up from $639 million or $1.67 per share in the prior-year quarter. Our estimate for the metric was $924 million.
For 2024, adjusted earnings were $13.96, beating the consensus estimate of $13.53 and rising 12% year over year. Net income available to common shareholders (GAAP) was $4.45 billion or $11.59 per share, down from $4.82 billion or $11.95 per share in 2023.
Revenues Improve, Expenses Rise
Total net revenues for the quarter were $10.19 billion, up 7% from the prior-year quarter. The top line surpassed the Zacks Consensus Estimate of $10.16 billion.
For 2024, total net revenues grew 6% to $39.1 billion. The top line also outpaced the consensus estimate of $39.08 billion.
NII increased 8% year over year to $8.1 billion. NIM expanded 30 basis points (bps) to 7.03%. Our estimates for NII and NIM were $7.92 billion and 6.98%, respectively.
Non-interest income of $2.09 billion grew 5%. The rise was driven by higher service charges and other customer-related fees, and net interchange fees. Our estimate for non-interest income was $2.06 billion.
Non-interest expenses were $6.09 billion, up 7% year over year. The rise was due to an increase in almost all cost components except the amortization of intangibles cots and other expenses. We expected the metric to be $5.97 billion. Adjusted expenses were $5.87 billion, up 8%.
The efficiency ratio was 59.75%, down from 60.14% in the year-ago quarter. A fall in the efficiency ratio indicates an improvement in profitability.
As of Dec. 31, 2024, loans held for investment were $327.8 billion, up 2% from the prior-quarter end. Total deposits were $362.7 billion, rising 3%. Our estimates for loans held for investment and total deposits were $316.4 billion and $362.6 billion, respectively.
Credit Quality: A Mixed Bag
Provision for credit losses was $2.64 billion in the reported quarter, down 8% from the prior-year quarter. We anticipated provisions of $2.77 billion.
The 30-plus-day-performing delinquency rate fell 2 bps year over year to 3.69%. However, the net charge-off rate jumped 38 bps to 3.59%. Allowance, as a percentage of reported loans held for investment, was 4.96%, up 19 bps year over year.
Capital & Profitability Ratios Improve
As of Dec. 31, 2024, the Tier 1 risk-based capital ratio was 14.8%, up from 14.2% a year ago. The common equity Tier 1 capital ratio was 13.5%, improving from 12.9%.
At the end of the fourth quarter, the return on average assets was 0.90%, up from 0.60% in the year-ago period. Return on average common equity was 7.16%, up from 5.03%.
Share Repurchase Update
During the reported quarter, the company repurchased 0.88 million shares for $150 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, Capital One has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Capital One has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.