It has been about a month since the last earnings report for Capital One (COF Quick QuoteCOF - Free Report) . Shares have lost about 2.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Capital One due for a breakout? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Capital One Financial Corporation before we dive into how investors and analysts have reacted as of late.

Capital One Q2 Earnings Beat, Discover Deal Boosts NII and Fee Income

Capital One’s second-quarter 2025 adjusted earnings of $5.48 per share widely surpassed the Zacks Consensus Estimate of $3.83. The bottom line also compared favorably with $4.06 in the prior quarter.

Results benefited from higher net interest income and non-interest income. Also, loans and deposits improved in the quarter. However, the increase in expenses and jump in provisions were undermining factors.

Results excluded several non-recurring items, including charges related to the integration with Discover Financial. After considering these, net loss available to common shareholders was $4.34 billion or $8.58 per share against net income of $1.33 billion or $3.45 per share in the last quarter.

Revenues Increase, Expenses Jump

Total net revenues for the quarter were $12.49 billion, jumping 25% sequentially. Also, the top line beat the Zacks Consensus Estimate of $12.22 billion.

NII surged 25% year over year to $10 billion. NIM expanded 69 basis points (bps) to 7.62%. 

Non-interest income of $2.5 billion grew 26%. The rise was driven by higher service charges and other customer-related fees, other income and discount and interchange fees. 

Non-interest expenses were $6.99 billion, up 18%. The rise was due to an increase in almost all cost components except other expenses. Adjusted expenses were $6.4 billion, jumping 14%.

The efficiency ratio was 55.96%, down from 59.02% in the last quarter. A rise in the efficiency ratio indicates a deterioration in profitability.

As of June 30, 2025, loans held for investment were $439.3 billion, growing 36% from the prior-quarter end. Total deposits were $468.1 billion, rising 27%.

Credit Quality: A Mixed Bag

Provision for credit losses was $11.43 billion, rising substantially from $2.37 billion in the prior quarter. Additionally, allowance, as a percentage of reported loans held for investment, was 5.43%, up 20 bps.

The 30-plus-day-performing delinquency rate fell 16 bps sequentially to 3.13%. Further, the net charge-off rate declined 16 bps to 3.24%.

Capital Ratios Improve

As of June 30, 2025, the Tier 1 risk-based capital ratio was 15.1%, up from 14.9% as of March 31, 2025. The common equity Tier 1 capital ratio was 14%, improving from 13.6%.

Share Repurchase Update

During the reported quarter, the company repurchased 0.76 million shares for $150 million.

Outlook

Management expects the full quarter benefit from the Discover acquisition to drive an additional 40 bps increase in NIM, all else equal.

The integration costs from the acquisition are expected to be slightly higher than the previously announced $2.8 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

Currently, Capital One has a average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock has a score of A on the value side, putting it in the top 20% for value investors.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Capital One has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.