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Capital One Financial (COF - Free Report) stock has risen 21.6% so far this year, outperforming its close peers — Ally Financial (ALLY - Free Report) and OneMain Holdings, Inc. (OMF - Free Report) . Moreover, it has outperformed the Zacks Finance Sector and the S&P 500 index, while underperforming the industry over the same time frame.
Capital One’s YTD Price Performance
Image Source: Zacks Investment Research
Capital One’s adjusted earnings increased 47.3% to $16 per share in the first nine months of 2025 on a year-over-year basis. Further, its revenues rose 30.9% to $37.9 billion, driven by higher net interest income (NII) and non-interest income alongside an increase in loans held for investments. On the other hand, non-interest expenses rose 37.4% during the same period.
Despite an impressive performance this year, tariff policies, government shutdown, stretched valuations and fears of an artificial intelligence (AI) bubble burst have led to a volatile and tough macroeconomic backdrop.
Let us assess whether COF stock is worth adding to one’s portfolio amid the ongoing concerns.
Factors That Support Capital One Stock
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. In the third quarter of 2025, net interest margin (NIM) rose 74 basis points (bps) sequentially on the back of a full-quarter impact of the Discover buyout.
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.
Rate Path & Revenue Growth: Though the Federal Reserve reduced interest rates by 50 basis points (bps) this year and 100 bps in 2024, the rates are still relatively high compared to the 2020 and 2021 levels of near-zero. This will likely continue to 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 nine months of 2025. Likewise, NIM expanded to 7.69% in the first nine months of 2025 from 6.83% 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 nine months of 2025.
Quarterly Revenue Trend
Image Source: Zacks Investment Research
Rising demand for credit card loans and online banking businesses is expected to drive NII and NIM growth. The company 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 continues to show strong momentum in its Domestic Credit Card segment, which contributed 93.7% of Credit Card net revenues in the first nine months of 2025. Segment net revenues grew 33.5% year over year, while domestic credit card loans surged 70% during the same period.
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 Sept. 30, 2025, Capital One had a total debt (securitized debt obligations plus other debt) of $51.5 billion. The total cash and cash equivalents balance was $55.3 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.
As of Sept. 30, 2025, Capital One’s common equity tier 1 ratio and the total capital ratio of 14.4% and 17.4%, respectively, were well above the regulatory requirements. Further, the company has an average liquidity coverage ratio of 161%.
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. Earlier this week, the company hiked its dividend by 33.3% to 80 cents per share. The bank has hiked dividends thrice during the last five years, with a dividend payout ratio of 13%.
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.
Further, in October 2025, its board of directors replaced the previous share repurchase program, authorizing up to $16 billion of shares. Given its earnings strength and solid liquidity position, the company’s enhanced capital distribution plans look sustainable.
Bullish Analyst Sentiments for Capital One
Over the past month, the Zacks Consensus Estimate for 2025 and 2026 earnings of $18.64 and $19.79 has been revised upward by 8.9% and 2.8%, respectively.
Estimate Revision Trend
Image Source: Zacks Investment Research
The projected figures imply year-over-year growth of 33.5% and 6.2% for 2025 and 2026, respectively.
How to Approach Capital One Stock Now
Capital One is well-positioned to capitalize on the Discover 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.
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 nine months of 2025. Expense levels are expected to remain elevated, given the company’s investments in technology and infrastructure, as well as inorganic expansion efforts. The rise in the cost of modern technology talent and continued investments in growth opportunities will strain annual operating efficiency in the near term.
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 nine months of 2025. Amid a challenging macroeconomic backdrop, provisions and NCOs are likely to remain elevated in the near term.
In terms of valuation, COF’s price-to-book ratio (P/B) of 1.22X is higher than the industry's 0.81X. 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 2.14X, respectively. This indicates that Capital One is trading at a premium to Ally Financial and at a discount relative to OneMain.
Capital One has been allocating capital efficiently. This is demonstrated by the company’s return on equity (ROE) of 10.94% compared with the industry’s ROE of 10.22%.
ROE
Image Source: Zacks Investment Research
Additionally, rising credit card demand will continue to drive its revenues. This is reflected in the bullish analyst sentiments regarding the company’s long-term prospects. Thus, Capital One remains an attractive bet at the moment.
Image: Bigstock
Capital One Stock Rises 21.6% YTD: Is There More Upside Ahead?
Key Takeaways
Capital One Financial (COF - Free Report) stock has risen 21.6% so far this year, outperforming its close peers — Ally Financial (ALLY - Free Report) and OneMain Holdings, Inc. (OMF - Free Report) . Moreover, it has outperformed the Zacks Finance Sector and the S&P 500 index, while underperforming the industry over the same time frame.
Capital One’s YTD Price Performance
Image Source: Zacks Investment Research
Capital One’s adjusted earnings increased 47.3% to $16 per share in the first nine months of 2025 on a year-over-year basis. Further, its revenues rose 30.9% to $37.9 billion, driven by higher net interest income (NII) and non-interest income alongside an increase in loans held for investments. On the other hand, non-interest expenses rose 37.4% during the same period.
Despite an impressive performance this year, tariff policies, government shutdown, stretched valuations and fears of an artificial intelligence (AI) bubble burst have led to a volatile and tough macroeconomic backdrop.
Let us assess whether COF stock is worth adding to one’s portfolio amid the ongoing concerns.
Factors That Support Capital One Stock
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. In the third quarter of 2025, net interest margin (NIM) rose 74 basis points (bps) sequentially on the back of a full-quarter impact of the Discover buyout.
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.
Rate Path & Revenue Growth: Though the Federal Reserve reduced interest rates by 50 basis points (bps) this year and 100 bps in 2024, the rates are still relatively high compared to the 2020 and 2021 levels of near-zero. This will likely continue to 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 nine months of 2025. Likewise, NIM expanded to 7.69% in the first nine months of 2025 from 6.83% 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 nine months of 2025.
Quarterly Revenue Trend
Image Source: Zacks Investment Research
Rising demand for credit card loans and online banking businesses is expected to drive NII and NIM growth. The company 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 continues to show strong momentum in its Domestic Credit Card segment, which contributed 93.7% of Credit Card net revenues in the first nine months of 2025. Segment net revenues grew 33.5% year over year, while domestic credit card loans surged 70% during the same period.
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 Sept. 30, 2025, Capital One had a total debt (securitized debt obligations plus other debt) of $51.5 billion. The total cash and cash equivalents balance was $55.3 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.
As of Sept. 30, 2025, Capital One’s common equity tier 1 ratio and the total capital ratio of 14.4% and 17.4%, respectively, were well above the regulatory requirements. Further, the company has an average liquidity coverage ratio of 161%.
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. Earlier this week, the company hiked its dividend by 33.3% to 80 cents per share. The bank has hiked dividends thrice during the last five years, with a dividend payout ratio of 13%.
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.
Further, in October 2025, its board of directors replaced the previous share repurchase program, authorizing up to $16 billion of shares. Given its earnings strength and solid liquidity position, the company’s enhanced capital distribution plans look sustainable.
Bullish Analyst Sentiments for Capital One
Over the past month, the Zacks Consensus Estimate for 2025 and 2026 earnings of $18.64 and $19.79 has been revised upward by 8.9% and 2.8%, respectively.
Estimate Revision Trend
Image Source: Zacks Investment Research
The projected figures imply year-over-year growth of 33.5% and 6.2% for 2025 and 2026, respectively.
How to Approach Capital One Stock Now
Capital One is well-positioned to capitalize on the Discover 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.
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 nine months of 2025. Expense levels are expected to remain elevated, given the company’s investments in technology and infrastructure, as well as inorganic expansion efforts. The rise in the cost of modern technology talent and continued investments in growth opportunities will strain annual operating efficiency in the near term.
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 nine months of 2025. Amid a challenging macroeconomic backdrop, provisions and NCOs are likely to remain elevated in the near term.
In terms of valuation, COF’s price-to-book ratio (P/B) of 1.22X is higher than the industry's 0.81X. 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 2.14X, respectively. This indicates that Capital One is trading at a premium to Ally Financial and at a discount relative to OneMain.
Capital One has been allocating capital efficiently. This is demonstrated by the company’s return on equity (ROE) of 10.94% compared with the industry’s ROE of 10.22%.
ROE
Image Source: Zacks Investment Research
Additionally, rising credit card demand will continue to drive its revenues. This is reflected in the bullish analyst sentiments regarding the company’s long-term prospects. Thus, Capital One remains an attractive bet at the moment.
Currently, COF sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.