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Capital One Hits 52-Week High

Zacks Equity Research

Shares of Capital One Financial Corp. (COF) reached a new 52-week high, touching $76.16 in the first half of the trading session on Dec 30, 2013. However, the stock closed the session at $75.82, registering a solid year-to-date return of 25.6%.The trading volume for the session was 1.4 million shares.

Despite the strong price appreciation, this Zacks Rank #3 (Hold) stock has plenty of upside left, given its positive estimate revisions over the last 60 days and expected long-term earnings growth rate of 7.8%.

Growth Drivers

Impressive third-quarter 2013 results, which beat the Zacks Consensus Estimate by 6.2%, along with improvement in profitability ratios were the primary growth drivers for Capital One.

On Oct 18, Capital One reported third-quarter 2013 results. The company’s earnings per share of $1.86 outpaced the Zacks Consensus Estimate of $1.77. The quarter witnessed higher-than-expected revenues and improvement in profitability ratios. However, mounting expenses was a dampener.

Further, in Sep 2013, Capital One completed the sale of certain private label and co-branded credit card accounts worth $6 billion to Citigroup Inc. (C). Hence, with the closure of the deal, the company resumed its $1 billion share repurchase program.

Additionally, Capital One has delivered positive earnings surprises in 3 out of the past 4 quarters with an average beat of 7.66%.

Estimate Revisions Show Potency

Over the last 60 days the Zacks Consensus Estimate rose 1.0% to $7.05 per share. For 2014, the Zacks Consensus Estimate inched up 0.1% to $6.93 per share, over the same time frame.

Other players in the finance industry that presently look attractive include Waddell & Reed Financial, Inc. (WDR) and GAMCO Investors, Inc. (GBL). Both these stocks carry a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on COF
Read the Full Research Report on WDR
Read the Full Research Report on C
Read the Full Research Report on GBL

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