Capital One Financial Corp COF

Capital One's Credit Costs Have Improved, but Integrating Discover Will Be the Focus for 2026

Capital One Financial has doubled down on its credit card business. It acquired Discover in May 2025 in an all-stock deal valued at $35.3 billion, making it the largest credit card issuer in the US by receivables. We like this approach, as we think Capital One paid a fair price for the assets, and there was clear strategic value to the deal, thanks to Discover's vertically integrated ATM and payment networks. While Capital One will need to realize significant revenue and expense synergies to justify the share dilution that came as part of the deal, we see a clear road map for it to meet its goals.