Capital One Earnings: Stronger-Than-Expected Credit Results and Margin Expansion Drive Net Income

Narrow-moat-rated Capital One reported a good third quarter as credit costs came in lower than expected and pressure on the bank's net interest margin moderated. Net revenue increased 6% from last year and 4% from last quarter to $9.4 billion. Meanwhile, net income increased 6% year over year to $1.8 billion, which translates to a return on tangible equity of 19.59%. As we incorporate these results, we do not plan to materially alter our $146 per share fair value estimate. We see the shares as undervalued.