On Mar 5, 2014, we issued an updated research report on
Capital One Financial Corp.
). Though the company reported lower-than-expected fourth-quarter
2013 results, its organic and inorganic growth strategies as well
as strong balance sheet position will likely continue to support
Capital One has taken several strategic decisions over the past
few years, which have helped it counter economic challenges.
These include focusing on the healthiest businesses while largely
avoiding less resilient ventures such as mortgages. Further,
Domestic Card business continues to deliver strong returns on a
risk-adjusted basis, with a continuous rise in revenues.
Additionally, Capital One is an attractive pick for yield-seeking
investors. In 2013, for the first time since the financial
crisis, the company announced an enhanced capital deployment
plan. Notably, management expects to generate a payout ratio
above the industry average of 50%, upon approval of its 2014
Capital Analysis and Review (CCAR).
However, Capital One's fourth-quarter 2013 earnings missed the
Zacks Consensus Estimate by 5.8%. Results were adversely impacted
by a fall in net interest income and slight rise in operating
Dismal results at Capital One triggered a downward revision of
the Zacks Consensus Estimate, as analysts turned more bearish on
the stock's future performance. This is evident from the movement
witnessed in the Zacks Consensus Estimate over the past 60 days.
For 2014, it decreased 1.7% to $6.81 per share while it declined
2.7% to $7.29 for 2015.
Capital One now has a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Some better-ranked stocks in the same sector include
Discover Financial Services
The First Marblehead Corp.
World Acceptance Corp.
). All of these have a Zacks Rank #2 (Buy).
CAPITAL ONE FIN (COF): Free Stock Analysis
DISCOVER FIN SV (DFS): Free Stock Analysis
FIRST MARBLEHD (FMD): Get Free Report
WORLD ACCEPTANC (WRLD): Free Stock Analysis
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