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COF Declines 4.9% in a Month: Is This the Right Time to Buy the Stock?
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Key Takeaways
COF fell 4.9% in a month, outperforming peers but lagging the industry and broader market indexes.
Discover Financial's $35.3B acquisition boosts COF's scale, card offerings and digital banking reach.
COF's strong balance sheet supports dividends and buybacks, but rising expenses and credit losses pose risks.
In the past month, Capital One Financial Corporation (COF - Free Report) stock has declined 4.9%, outperforming its close peers — Ally Financial (ALLY - Free Report) and OneMain Holdings, Inc. (OMF - Free Report) . However, it has underperformed the industry, Zacks Finance Sector and the S&P 500 index over the same time frame.
Capital One’s One-Month Price Performance
Image Source: Zacks Investment Research
Given the uncertain and volatile backdrop, let us assess whether COF stock is worth adding to your portfolio.
Factors That Support Capital One
Strategic Buyouts: Capital One has been pursuing opportunistic acquisitions to drive its revenues. In May 2025, the company acquired Discover Financial in an all-stock transaction valued at $35.3 billion, reshaping the landscape of the credit card industry, creating a behemoth and unlocking substantial value for shareholders.
Additionally, it acquired Velocity Black in 2023 to enhance customer experience. Other notable acquisitions include ING Direct USA, HSBC's U.S. Credit Card Portfolio and TripleTree. These have been instrumental in transforming the company from a monoline credit card issuer into a diversified financial services firm with a significant presence in retail banking, commercial lending and digital banking platforms.
Relatively Higher Rates: The Federal Reserve has kept interest rates unchanged this year in light of tariff policy concerns. This will likely support COF’s net interest income (“NII”) and net interest margin (“NIM”).
Capital One’s NII recorded a compound annual growth rate (CAGR) of 6% over the five years ended 2024. The momentum for NII continued during the first six months of 2025. Also, NIM expanded to 7.29% in the first half of 2025 from 6.69% in the prior year quarter.
Though the company’s revenues declined marginally in 2020, the metric witnessed a five-year (2019-2024) CAGR of 6.5%. In the same time frame, net loans held for investment recorded a CAGR of 4.3%. The uptrend continued for revenues and loans during the first half of 2025.
Quarterly Revenue Trend
Image Source: Zacks Investment Research
Rising demand for credit card loans and online banking businesses will aid NII and NIM. Additionally, Capital One plans to continue to offer Discover credit card products as Discover-branded cards along with the other consumer cards currently offered by Capital One. This will solidify its presence in an intensely competitive environment. COF has been demonstrating an improvement in the Domestic Credit Card division, which accounted for 93.6% of Credit Card net revenues in the first six months of 2025.
Further, Capital One's "Digital First" banking model, characterized by its iconic customer experience and fee-free offerings, will be bolstered by Discover Financial's national direct savings bank. This synergy will increase the combined company's ability to compete with the nation's largest banks while accelerating national banking growth.
Sales Estimates
Image Source: Zacks Investment Research
Solid Balance Sheet: As of June 30, 2025, Capital One had a total debt (securitized debt obligations plus other debt) of $52.3 billion. The total cash and cash equivalents balance was $59.1 billion.
Additionally, the company holds investment-grade long-term senior debt ratings of Baa1, BBB and A- from Moody’s Investor Service, the Standard and Poor’s and Fitch Ratings, respectively. This renders the company favorable access to the debt market.
Moreover, as of June 30, 2025, Capital One’s common equity tier 1 ratio and the total capital ratio of 14% and 17.1%, respectively, were well above the regulatory requirements. Further, the company has an average liquidity coverage ratio of 157%.
Average Liquidity Coverage Ratio
Image Source: Capital One Financial Corp.
Capital One’s focus on maintaining strong capital and balance sheet positions supports its capital distribution activities. In July 2021, the company hiked its dividend by 50% to 60 cents per share and has maintained the same level since then. The bank hiked dividends twice during the last five years, with a dividend payout ratio of 14%.
Dividend Yield
Image Source: Zacks Investment Research
Similarly, Ally Financial and OneMain increased their dividends twice and six times over the past five years, respectively.
Capital One has a share repurchase plan. As of June 30, 2025, roughly $3.88 billion worth of shares remained available for repurchase under the authorization.
Bullish Analyst Sentiments for Capital One
Over the past month, the Zacks Consensus Estimate for 2025 earnings of $16.60 has been revised upward 14.6%, while the same for 2026 earnings has moved marginally upward to $18.81 per share.
Estimate Revision Trend
Image Source: Zacks Investment Research
The projected figures imply year-over-year growth of 18.9% and 13.3% for 2025 and 2026, respectively.
How to Play Capital One Stock Now
Capital One is well-positioned to capitalize on the Discover Financial acquisition and expand its presence in the growing credit card market. Its revenue diversification efforts, relatively higher interest rates and a solid balance sheet will continue to support its financials. Analysts remain optimistic regarding COF’s long-term prospects despite near-term concerns.
However, steadily rising expenses are a headwind. The company recorded a five-year CAGR of 6.8% (ended 2024) in non-interest expenses, mainly due to higher marketing costs and inflationary pressures. The uptrend persisted during the first half of 2025. Expenses are expected to remain elevated in the near term due to ongoing technological investments, integration of Discover Financial and inflation.
Deteriorating asset quality is another concern. Capital One’s provisions and net charge-offs (NCOs) recorded a CAGR of 13.4% and 11.4% over the five years ended 2024. The trend persisted for both during the first six months of 2025. Amid a challenging macroeconomic backdrop and the Discover Financial merger, provision and NCOs are likely to remain elevated in the near term.
In terms of valuation, COF’s price-to-book ratio (P/B) of 0.72X is higher than the industry's 0.49X. Thus, the stock is trading at a premium.
P/B Ratio
Image Source: Zacks Investment Research
Meanwhile, its peers Ally Financial and OneMain have a P/B ratio of 0.93X and 2.01X, respectively. This indicates Ally Financial and OneMain are overvalued relative to Capital One.
Further, Capital One might be allocating capital inefficiently. This is demonstrated by the company’s return on equity (ROE) of 10.01% compared with the industry’s ROE of 10.24%.
ROE
Image Source: Zacks Investment Research
Thus, investors should watch out for these concerns and also monitor how Capital One integrates the Discover acquisition into its businesses before making any investment decision. Those who already own the stock can hold on to it for robust long-term gains.
Image: Bigstock
COF Declines 4.9% in a Month: Is This the Right Time to Buy the Stock?
Key Takeaways
In the past month, Capital One Financial Corporation (COF - Free Report) stock has declined 4.9%, outperforming its close peers — Ally Financial (ALLY - Free Report) and OneMain Holdings, Inc. (OMF - Free Report) . However, it has underperformed the industry, Zacks Finance Sector and the S&P 500 index over the same time frame.
Capital One’s One-Month Price Performance
Image Source: Zacks Investment Research
Given the uncertain and volatile backdrop, let us assess whether COF stock is worth adding to your portfolio.
Factors That Support Capital One
Strategic Buyouts: Capital One has been pursuing opportunistic acquisitions to drive its revenues. In May 2025, the company acquired Discover Financial in an all-stock transaction valued at $35.3 billion, reshaping the landscape of the credit card industry, creating a behemoth and unlocking substantial value for shareholders.
Additionally, it acquired Velocity Black in 2023 to enhance customer experience. Other notable acquisitions include ING Direct USA, HSBC's U.S. Credit Card Portfolio and TripleTree. These have been instrumental in transforming the company from a monoline credit card issuer into a diversified financial services firm with a significant presence in retail banking, commercial lending and digital banking platforms.
Relatively Higher Rates: The Federal Reserve has kept interest rates unchanged this year in light of tariff policy concerns. This will likely support COF’s net interest income (“NII”) and net interest margin (“NIM”).
Capital One’s NII recorded a compound annual growth rate (CAGR) of 6% over the five years ended 2024. The momentum for NII continued during the first six months of 2025. Also, NIM expanded to 7.29% in the first half of 2025 from 6.69% in the prior year quarter.
Though the company’s revenues declined marginally in 2020, the metric witnessed a five-year (2019-2024) CAGR of 6.5%. In the same time frame, net loans held for investment recorded a CAGR of 4.3%. The uptrend continued for revenues and loans during the first half of 2025.
Quarterly Revenue Trend
Image Source: Zacks Investment Research
Rising demand for credit card loans and online banking businesses will aid NII and NIM. Additionally, Capital One plans to continue to offer Discover credit card products as Discover-branded cards along with the other consumer cards currently offered by Capital One. This will solidify its presence in an intensely competitive environment. COF has been demonstrating an improvement in the Domestic Credit Card division, which accounted for 93.6% of Credit Card net revenues in the first six months of 2025.
Further, Capital One's "Digital First" banking model, characterized by its iconic customer experience and fee-free offerings, will be bolstered by Discover Financial's national direct savings bank. This synergy will increase the combined company's ability to compete with the nation's largest banks while accelerating national banking growth.
Sales Estimates
Image Source: Zacks Investment Research
Solid Balance Sheet: As of June 30, 2025, Capital One had a total debt (securitized debt obligations plus other debt) of $52.3 billion. The total cash and cash equivalents balance was $59.1 billion.
Additionally, the company holds investment-grade long-term senior debt ratings of Baa1, BBB and A- from Moody’s Investor Service, the Standard and Poor’s and Fitch Ratings, respectively. This renders the company favorable access to the debt market.
Moreover, as of June 30, 2025, Capital One’s common equity tier 1 ratio and the total capital ratio of 14% and 17.1%, respectively, were well above the regulatory requirements. Further, the company has an average liquidity coverage ratio of 157%.
Average Liquidity Coverage Ratio
Image Source: Capital One Financial Corp.
Capital One’s focus on maintaining strong capital and balance sheet positions supports its capital distribution activities. In July 2021, the company hiked its dividend by 50% to 60 cents per share and has maintained the same level since then. The bank hiked dividends twice during the last five years, with a dividend payout ratio of 14%.
Dividend Yield
Image Source: Zacks Investment Research
Similarly, Ally Financial and OneMain increased their dividends twice and six times over the past five years, respectively.
Capital One has a share repurchase plan. As of June 30, 2025, roughly $3.88 billion worth of shares remained available for repurchase under the authorization.
Bullish Analyst Sentiments for Capital One
Over the past month, the Zacks Consensus Estimate for 2025 earnings of $16.60 has been revised upward 14.6%, while the same for 2026 earnings has moved marginally upward to $18.81 per share.
Estimate Revision Trend
Image Source: Zacks Investment Research
The projected figures imply year-over-year growth of 18.9% and 13.3% for 2025 and 2026, respectively.
How to Play Capital One Stock Now
Capital One is well-positioned to capitalize on the Discover Financial acquisition and expand its presence in the growing credit card market. Its revenue diversification efforts, relatively higher interest rates and a solid balance sheet will continue to support its financials. Analysts remain optimistic regarding COF’s long-term prospects despite near-term concerns.
However, steadily rising expenses are a headwind. The company recorded a five-year CAGR of 6.8% (ended 2024) in non-interest expenses, mainly due to higher marketing costs and inflationary pressures. The uptrend persisted during the first half of 2025. Expenses are expected to remain elevated in the near term due to ongoing technological investments, integration of Discover Financial and inflation.
Deteriorating asset quality is another concern. Capital One’s provisions and net charge-offs (NCOs) recorded a CAGR of 13.4% and 11.4% over the five years ended 2024. The trend persisted for both during the first six months of 2025. Amid a challenging macroeconomic backdrop and the Discover Financial merger, provision and NCOs are likely to remain elevated in the near term.
In terms of valuation, COF’s price-to-book ratio (P/B) of 0.72X is higher than the industry's 0.49X. Thus, the stock is trading at a premium.
P/B Ratio
Image Source: Zacks Investment Research
Meanwhile, its peers Ally Financial and OneMain have a P/B ratio of 0.93X and 2.01X, respectively. This indicates Ally Financial and OneMain are overvalued relative to Capital One.
Further, Capital One might be allocating capital inefficiently. This is demonstrated by the company’s return on equity (ROE) of 10.01% compared with the industry’s ROE of 10.24%.
ROE
Image Source: Zacks Investment Research
Thus, investors should watch out for these concerns and also monitor how Capital One integrates the Discover acquisition into its businesses before making any investment decision. Those who already own the stock can hold on to it for robust long-term gains.
Currently, COF carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.