We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Should Investors Buy Capital One Stock After Crushing Q2 EPS Expectations?
In a busy week that includes quarterly results from Tesla (TSLA - Free Report) and Alphabet (GOOGL - Free Report) , Capital One (COF - Free Report) ) is sharing the spotlight after crushing its Q2 earnings expectations on Tuesday.
With Visa (V - Free Report) and Mastercard (MA - Free Report) set to release their reports next week, Capital One has set the bar for these major credit card and payment solution providers.
That said, let’s see if it’s time to buy Capital One stock, with it noteworthy that COF is up more than +20% in 2025 and has now soared nearly +100% in the last three years to impressively outperform the broader market, Visa, and Mastercard’s gains of over +60%.
Image Source: Zacks Investment Research
Capital One’s Strong Q2 Results
Setting Capital One apart from credit card giants like Visa and Mastercard is the company’s focus on consumer and commercial lending. Further boosting Capital One’s consumer and lending endeavors was the completed acquisition of Discover Financial Services in May, which added $2 billion in revenue during Q2 and also expanded its credit card and payment networks footprint.
Overall, Capital One’s Q2 sales soared 31% to $12.49 billion compared to $9.5 billion a year ago and topped estimates of $12.22 billion. More impressive, Q2 earnings skyrocketed 74% to $5.48 per share from EPS of $3.14 in the prior year quarter. Astonishingly, this crushed the Zacks EPS Consensus of $3.83 by 43%, with it noteworthy that Capital One has now surpassed its bottom-line expectations for four consecutive quarters, posting a very impressive average earnings surprise of 23.02%.
Despite reporting a GAAP net loss of $4.3 billion, due to separate one-time charges from the $35.3 billion acquisition of Discover, other Q2 highlights included Capital One’s credit card loans surging 72% to $269.7 billion while deposits rose 27% to $468.1 billion.
Image Source: Zacks Investment Research
Discover’s Loan Boost
Notably, Capital One acquired $98.3 billion of domestic card loans from Discover with what CFO Andre Young said was a net fair value discount of $220 million. Additionally, Capital One acquired $9.9 billion of personal loans with a net fair value discount of $114 million, along with $106.7 billion of deposits with a net fair value discount of $30 million.
Capital One also acquired $7.9 billion of home loans, which have been marked as held for sale and are now included in its discontinued operations.
Capital One Reconfirms its Full-Year Outlook
Amid the recent Discover acquisition, Capital One still reconfirmed its full-year fiscal 2025 outlook, expecting revenue to increase 36% to $53.29 billion, which came in above the current Zacks Consensus of $52.3 billion. Furthermore, Capital One still expects annual earnings to be up 9% to $15.25 per share, although this was below previous updated expectations of $15.51.
Capital One’s Attractive Valuation
Intriguing to long-term investors is that at 14X forward earnings, Capital One stock still trades nicely beneath the benchmark S&P 500’s 24X. Plus, Capital One trades at an even steeper discount to Visa and Mastercard’s forward earnings multiples of 30X and 34X, respectively.
COF also trades under the optimum level of less than 2X forward sales, while Visa and Mastercard stock trade at more than 17X, with the S&P 500’s average at 5.4X.
Image Source: Zacks Investment Research
Conclusion & Final Thoughts
While Capital One wasn’t able to raise its full-year guidance after crushing earnings expectations, reconfirming its outlook was still a meaningful sign that the Discover acquisition is paying off. For now, Capital One stock lands a Zacks Rank #3 (Hold) and surely offers long-term value to investors at current levels.
That said, more upside (and a buy rating) will likely depend on what is hopefully a positive trend of earnings estimate revisions for FY26, as FY25 EPS estimates are likely to decline in correlation with the company’s guidance coming in below previous updated projections of $15.51 per share, which had risen over the last 30 days.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Should Investors Buy Capital One Stock After Crushing Q2 EPS Expectations?
In a busy week that includes quarterly results from Tesla (TSLA - Free Report) and Alphabet (GOOGL - Free Report) , Capital One (COF - Free Report) ) is sharing the spotlight after crushing its Q2 earnings expectations on Tuesday.
With Visa (V - Free Report) and Mastercard (MA - Free Report) set to release their reports next week, Capital One has set the bar for these major credit card and payment solution providers.
That said, let’s see if it’s time to buy Capital One stock, with it noteworthy that COF is up more than +20% in 2025 and has now soared nearly +100% in the last three years to impressively outperform the broader market, Visa, and Mastercard’s gains of over +60%.
Image Source: Zacks Investment Research
Capital One’s Strong Q2 Results
Setting Capital One apart from credit card giants like Visa and Mastercard is the company’s focus on consumer and commercial lending. Further boosting Capital One’s consumer and lending endeavors was the completed acquisition of Discover Financial Services in May, which added $2 billion in revenue during Q2 and also expanded its credit card and payment networks footprint.
Overall, Capital One’s Q2 sales soared 31% to $12.49 billion compared to $9.5 billion a year ago and topped estimates of $12.22 billion. More impressive, Q2 earnings skyrocketed 74% to $5.48 per share from EPS of $3.14 in the prior year quarter. Astonishingly, this crushed the Zacks EPS Consensus of $3.83 by 43%, with it noteworthy that Capital One has now surpassed its bottom-line expectations for four consecutive quarters, posting a very impressive average earnings surprise of 23.02%.
Despite reporting a GAAP net loss of $4.3 billion, due to separate one-time charges from the $35.3 billion acquisition of Discover, other Q2 highlights included Capital One’s credit card loans surging 72% to $269.7 billion while deposits rose 27% to $468.1 billion.
Image Source: Zacks Investment Research
Discover’s Loan Boost
Notably, Capital One acquired $98.3 billion of domestic card loans from Discover with what CFO Andre Young said was a net fair value discount of $220 million. Additionally, Capital One acquired $9.9 billion of personal loans with a net fair value discount of $114 million, along with $106.7 billion of deposits with a net fair value discount of $30 million.
Capital One also acquired $7.9 billion of home loans, which have been marked as held for sale and are now included in its discontinued operations.
Capital One Reconfirms its Full-Year Outlook
Amid the recent Discover acquisition, Capital One still reconfirmed its full-year fiscal 2025 outlook, expecting revenue to increase 36% to $53.29 billion, which came in above the current Zacks Consensus of $52.3 billion. Furthermore, Capital One still expects annual earnings to be up 9% to $15.25 per share, although this was below previous updated expectations of $15.51.
Capital One’s Attractive Valuation
Intriguing to long-term investors is that at 14X forward earnings, Capital One stock still trades nicely beneath the benchmark S&P 500’s 24X. Plus, Capital One trades at an even steeper discount to Visa and Mastercard’s forward earnings multiples of 30X and 34X, respectively.
COF also trades under the optimum level of less than 2X forward sales, while Visa and Mastercard stock trade at more than 17X, with the S&P 500’s average at 5.4X.
Image Source: Zacks Investment Research
Conclusion & Final Thoughts
While Capital One wasn’t able to raise its full-year guidance after crushing earnings expectations, reconfirming its outlook was still a meaningful sign that the Discover acquisition is paying off. For now, Capital One stock lands a Zacks Rank #3 (Hold) and surely offers long-term value to investors at current levels.
That said, more upside (and a buy rating) will likely depend on what is hopefully a positive trend of earnings estimate revisions for FY26, as FY25 EPS estimates are likely to decline in correlation with the company’s guidance coming in below previous updated projections of $15.51 per share, which had risen over the last 30 days.