In the three months to March, Capital One Financial Corporation (NYSE: COF) had a bearish momentum in the stock market. The American holding company is scheduled to release its first quarter report after the market closes on Tuesday, April 25. Here’s what to expect from the COF amid its disappointing performance of the stock.
The diversified financial services had a net income of $791 million, or $1.45 per diluted common share for the fourth quarter of 2016. Spurred by the higher yields on its Credit Card business, the net interest margin increased 6 basis points quarter-over-quarter.
Richard D. Fairbank, Chairman and Chief Executive Officer noted in his statement that assuming no substantial change in the broader credit and economic cycles, their strong growth over the last two years and actions to reduce share count put them in a position to deliver solid EPS growth in 2017.
In the fourth quarter alone, domestic card period-end loans climbed 7 percent or $7.6 billion to $97.1 billion while domestic card average loans increased 3 percent or $2.9 billion to $92.6 billion. Consumer banking period-end loans also advanced 1 percent or $769 million to $76.1 billion while consumer banking average loans jumped 1 percent or $932 million to $72.7 billion. Further, commercial banking period-end loans managed to increase 1 percent or $459 million to $66.9 billion, while its average loans for this segment added 1 percent or $481 million to $66.5 billion.
What to Expect?
The solid performance of COF in the fourth quarter of 2016 called for a bullish outlook for this quarter. From the $1.45 EPS recorded last quarter, Zacks Investment Research released an average EPS forecast of $1.93. The estimated figure also surpassed the $1.85 forecasted EPS for the same quarter last year.
Although the consumer banking and the commercial banking segments of the company did not perform as high as the domestic card, experts are still betting for positive figures as the Fed rate increase on December 2016 pulled the dollar at the start of 2017.
Meanwhile, President Donald Trump has been pushing significant changes in the banking sector. Few weeks ago, Trump highlighted in his statement that his administration will be doing things that are going to be very good for the banking industry so that the banks can loan money to people who need it, and in the long run will result in the creation of more jobs.
However, not all the financial stocks responded positively in the enthusiasm that Trump was trying to build since he took the office. For instance, the COF stock was seen fluctuating in the first three months of 2017. The investors’ inconsistent interest on the stock was reflected as it moved from 88.00 levels down to its recent 82.00 levels.
In the three months to December 2016, the COF stock showed an uptrend which later on translated to a better-than-expected earnings result. For this quarter, the stock performance of the company will definitely be something to consider.
Prior to the earnings report, the holding company received a consensus rating of Hold and an average price target of $89.63. The stock finished at $82.67 in the week ended on April 21, after opening at $86.64 with a session high of 83.96 and a session low of 82.65. Its market capitalization stood at $39.91 billion with a price earnings ratio of 11.96 and a dividend yield of 1.94 percent.
The analysts’ consensus price target was near to its 50-day moving average of $86.29 and lower than its 200-day moving average of $84.76. The stock has a 52-week low of $58.03 and a 52-week high of $96.92.
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