Capital One Touches New 52-Week High - Analyst Blog

Shares of Capital One Financial Corporation COF achieved a new 52-week high, reaching $78.90 within the first hour of the trading session on May 29. The stock closed at $78.72, reflecting a solid return of 30.0% over the past one year. The trading volume for the session was 2.5 million shares.

Despite the strong price appreciation, this Zacks Rank #3 (Hold) stock has plenty of upside left, given its sturdy estimate revisions over the last 30 days.

Growth Drivers

Impressive first-quarter 2014 results, along with prudent expense management, improving asset quality and steady capital deployment activities were the primary growth drivers for Capital One.

Capital One reported first-quarter 2014 results on Apr 16. The earnings of $1.96 per share outpaced the Zacks Consensus Estimate by 17.4%. Results benefited from growth in fee income, lower provision for credit losses and decline in operating expenses, partially offset by lower net interest income.

Additionally, Capital One's capital ratios continued to improve. As of Mar 31, 2014, Tier 1 risk-based capital ratio was 13.4%, up from 12.1% as of Mar 31, 2013. Also, total risk-based capital ratio rose to 15.4% from 14.4% as of Mar 31, 2013.

Estimate Revisions Show Strength

Over the last 60 days, 14 out of 17 estimates for 2014 have been revised upward, lifting the Zacks Consensus Estimate by roughly 5.4% to $7.18 per share. For 2015, the Zacks Consensus Estimate increased 1.4% to $7.39 per share over the same time frame.

Some better-ranked finance stocks include BofI Holding, Inc. BOFI, First Republic Bank FRC and Central Valley Community Bancorp CVCY. All of these carry a Zacks Rank #2 (Buy).

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