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Capital One Financial Corp COF

Morningstar Rating
$135.99 −0.78 (0.57%)
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Company Report

Capital One to Acquire Discover

Narrow-moat Capital One Financial has agreed to acquire Discover Financial Services in an all-stock deal worth $35 billion. The acquisition is expected to close by late 2024 to early 2025. In general, we are neutral on the deal as we do see strategic value to it, particularly as it relates to Discover’s network. Additionally, we believe Capital One is paying a fair price, with the implied transaction price of $139.86 per share at the time of the announcement being nearly equal to our $141 fair value estimate for Discover. That said, there will be meaningful integration risk and some uncertainty around regulatory approval, as the combined company would be the largest credit card issuer in the U.S. by loan volume. Therefore, we do not expect our fair value estimate to change as a result of the transaction.

Price vs Fair Value

COF is trading at a 11% discount.
Price
$135.99
Fair Value
$355.00
Uncertainty
High
1-Star Price
$714.34
5-Star Price
$83.70
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Capital One's credit card portfolio is enjoying rapid growth, providing a boost to the company's net interest margins and revenue growth.

Bears

Credit card reward spending continues to rise industrywide, and competition for credit card holders remains intense. This will likely lead to higher spending for Capital One and could threaten returns on its credit cards.

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News

Trading Information

Previous Close Price
$136.77
Day Range
$135.80137.31
52-Week Range
$83.93138.95
Bid/Ask
$134.47 / $137.20
Market Cap
$51.73 Bil
Volume/Avg
6 / 2.9 Mil

Key Statistics

Price/Earnings (Normalized)
10.86
Price/Sales
1.42
Dividend Yield (Trailing)
1.76%
Dividend Yield (Forward)
1.76%
Total Yield
2.57%

Company Profile

Capital One is a diversified financial services holding company headquartered in McLean, Virginia. Originally a spinoff of Signet Financial’s credit card division in 1994, the company is now primarily involved in credit card lending, auto loans, and commercial lending.
Sector
Financial Services
Industry
Credit Services
Stock Style Box
Large Value
Total Number of Employees
51,987

Competitors

Valuation

Metric
COF
AXP
SYF
Price/Earnings (Normalized)
10.8619.537.84
Price/Book Value
0.895.641.26
Price/Sales
1.422.671.26
Price/Cash Flow
2.8610.931.93
Price/Earnings
COF
AXP
SYF

Financial Strength

Metric
COF
AXP
SYF
Quick Ratio
Current Ratio
Interest Coverage
Quick Ratio
No chart available

Profitability

Metric
COF
AXP
SYF
Return on Assets (Normalized)
1.02%3.64%2.06%
Return on Equity (Normalized)
8.78%33.42%17.90%
Return on Invested Capital (Normalized)
Return on Assets
COF
AXP
SYF
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Credit Services Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
V
Visa Inc Class AHhhx$576.2 Bil
MA
Mastercard Inc Class AKlvq$437.1 Bil
AXP
American Express CoSctk$158.5 Bil
PYPL
PayPal Holdings IncXzvpn$64.3 Bil
DFS
Discover Financial ServicesQjpvp$30.1 Bil
SYF
Synchrony FinancialRqck$16.5 Bil
ALLY
Ally Financial IncDxwj$11.2 Bil
SOFI
SoFi Technologies Inc Ordinary SharesQbfg$8.4 Bil
WU
The Western Union CoWnxdhv$4.7 Bil

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