Capital One actions increased Tuesday evening after the company has published better than expected profits in the first quarter, fired by credit quality beats. With the acquisition of Discover which should close in less than a month, more gains for the action could be in advance. Revenues for the three months closed on March 31 increased by 6.4% from one year to the next to $ 10 billion, slightly missing the consensual estimate of $ 10.06 billion, according to LSEG. The gains adjusted by Action (BPA) totaled $ 4.06, exceeding the estimate of $ 3.71, according to LSEG data. On an annual basis, the adjusted BPA increased by 26%. Capital One shares jumped approximately 3% after negotiation hours at around $ 175 per share. Such a decision would extend its winnings of the week to date at around 7.5%. US -term contracts also jumped evening after President Donald Trump said he had “no intention” to dismiss the president of the Fed, Jerome Powell. The president also admitted that the prices on China will not remain as high as 145%, although the moment when they could descend were not clear. COF YTD Mountain Capital One Performance of the actions of the year. Bottom line Capital One posted solid results from the first quarter and a reserve release greater than expected in its credit card activity should relieve certain short -term concerns concerning the capacity of its customers to reimburse their sales. Most importantly, the company has momentum before the closing of its discovers of 35 billion dollars. We continue to believe that the advantages of this agreement to the capital of we will be doubled. Not only is it very accretive for profit by action through network synergies and expenditure, but we also maintain that this could be a price for price remuneration. For example, the commercial model which will soon be integrated with capital one would look much more like American Express, which also has a network of payments like Discover. The actions of American Express are negotiated at around 14.5 times estimated for 2026 benefits per share, while the COF is negotiated at around 9 times the long -term profit. We do not defend that Capital One should negotiate the same multiple as American Express, but there is a convincing case that the delivery is narrowing. With the accretion of profits and the acceleration of share buybacks of the agreement always underestimated by the market, we repeat our purchase rating and our price objective of $ 210 per share. We recently added to our post on Monday. Capital One Financial Why we have it: the acquisition of Capital One to Discover Financial Services is a transformative agreement with strategic advantages and significant financial advantages. We expect the agreement to create value for merchants, small businesses and consumers. There are also several billion dollars of expenditure and networks synergies which should make this transaction very accessible to profits by action. Finally, the acquisition strengthens the OneE capital report, allowing redemptions of aggressive action in the future. Competitors: American Express, Mastercard, Visa the most recent purchase: April 21, 2025 Initiated: March 6, 2025 Capital Comment One The actions took a hit in the midst of recent tariff tensions – not due to direct exhibition at higher prices, but because a slower economy could threaten its credit performance. But as the first quarter results showed, the quality of credit here was better than expected. As the above graph shows, the net royalties and the provisions for the loss of credits were lower than expectations, leading to a reserve release than expected. At the end of the quarter, the total capital allowance for credit losses amounted to $ 15.899 billion, which represents a 4.91%coverage ratio. It is down five base points of the fourth quarter of 2024 thanks to the improvement of losses trends. These measures are relevant to Capital One because it also has a bank arm, even if its credit card activity is much larger and more associated with the company. Net discount costs refer to the amount of the debt that a bank has canceled as irrevocable, minus any recovery. The provisions concerning credit losses are funds that Capital One sets aside to cover potential loan defects. Finally, the allowance ratio measures how the bank must reserve to absorb potential losses – it is calculated by dividing the total allowance for credit losses in total loans held for investment. In its card portfolio, Capital One has seen an improvement in delinquency rates and payment rates, as well as lower delinquency inputs – all good signs for any investor concerned about the financial health of its customers. “Delinquentes are the best leading indicator,” CEO Richard Fairbank said during the call. “Our delinquencies were stable on a seasonal seasonal base throughout 2024. And … they improved compared to our seasonal expectations in the past six months.” More recently, Fairbank has called an increase in spending in recent weeks. He explained that part of this could be explained by the time of the Easter holidays, but there was also strength in retail expenses and in car purchases, which are probably due to advancement before prices. As for the expense, Fairbank called on travel and expenditure growth and plane tickets. Fairbank also offered additional comments on the global economic landscape, arguing that the American consumer “remains a source of strength in the economy”. Although he recognized that “certain consumer pockets feel the pressure” of inflation and higher interest rates, he declared that the company “always saw delayed billing effects of the pandemic, although our improved delinquations suggest that this effect can be moderator”. Overall, he called the American consumer “in good shape”. As the above graph shows, interest-free expenses were among the areas where Capital One has missed expectations, but part of it was awarded to an expense before tax of $ 110 million linked to the cost of integration of the discovery. Another engine of the increase in the increase. The company has spent more for direct response marketing, media spending and investment in higher advantages and differentiated customer experiences such as airline salons, travel portal and capital purchases. The prospects after the regulatory approval last week, Capital One is on the right track to close its acquisition of discovers on May 18. The company said on Tuesday that it continued to expect it to reach the initially announced synergies estimated when the agreement had been announced, although the time to reach them will be rejected by about six months due to the late in the closure. However, transaction synergies are important. As a reminder, the management expects the transaction will generate a total of $ 2.7 billion in synergies, divided between $ 1.5 billion in expenditure synergies and $ 1.2 billion in network synergies, the result of the movement of the ONE capital debt’s purchase volume and the volume of purchase of the credit card selected to the Network Discover – Mastercard and visa versa. After the conclusion of the agreement and that Capital One completed the annual review of capital and analysis (CCAR) of the Federal Reserve, we should start to see the company start to make the shareholders’ excess capital aggressively. (Jim Cramer’s Charitable Trust is long Cof. See here for a complete list of actions.) As abonted at the CNBC Investing Club with Jim Cramer, you will receive a commercial alert before Jim is doing a business. Jim is waiting for 45 minutes after sending a commercial alert before buying or selling a stock in the portfolio of his charitable trust. If Jim spoke of a stock on CNBC TV, he waits 72 hours after issuing the commercial alert before running the trade. The above information of investment clubs is subject to our terms and conditions and our privacy policies, as well as our warning. No obligation or fiduciary duty exists, or is created, due to your reception of the information provided in relation to the investment club. 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Capital One Headquarters in McLean, Virginia, February 20, 2024.
Brendan Smialowski | AFP | Getty images
Capital One The actions increased Tuesday evening after the company has published better quarter profits than expected, fired by credit quality beats. With Discover The acquisition should close in less than a month, more gains for the stock could be in advance.
