On Jul 11, 2013, we upgraded our recommendation on Capital One Financial Corp. (COF) to Outperform from Neutral based on its encouraging capital deployment activities. Alongside, the company has been growing both organically and inorganically.
Capital One has always been an attractive pick for yield-seeking investors. Recently, in Jul 2013, the company announced a share repurchase authorization worth $1.0 billion. Earlier, in May 2013, the company announced a 500% hike in its common stock dividend. All these factors have boosted shareholders’ confidence.
Capital One has a geographically diversified loan portfolio due to its series of acquisitions through which it entered into new geographic markets. This in turn, has reduced the operational risk for the company.
Moreover, Capital One has been witnessing steady growth in deposits. Total customer deposits have also been continuously increasing. These factors evidently reflect Capital One’s strength with respect to its credit card businesses.
For Capital One, the Zacks Consensus Estimate for 2013 remained unchanged at $6.56 per share over the last 60 days. For 2014, the Zacks Consensus Estimate advanced 0.4% to $6.70 per share over the same time frame.
The Zacks Consensus Estimate for the second quarter is pegged at $1.71 per share. The earnings ESP (Read: Zacks Earnings ESP: A Better Method) for Capital One is +2.34% for the second quarter. This, along with its Zacks Rank #2 (Buy) makes it likely for the company to report a positive earnings surprise.
Other Stocks to Consider
Other stocks that are worth considering include Discover Financial Services (DFS), Regional Management Corp. (RM) and World Acceptance Corp. (WRLD). All the stocks carry a Zacks Rank #2 (Buy).
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