Capital One Financial: Is There Still Upside?

12/28/17

Even after a 25% run up since I last addressed the stock, Capital One Financial Corp (COF) shares still present a golden opportunity for value and DGI investors due to its solid EPS growth, improving loan portfolio quality, improving margins from rising interest rates, cheap valuation, and strong potential for dividend growth.

In its latest quarterly report, COF beat EPS estimates by over 10% while enjoying year-over-year revenue growth of 8.2% as consumer appetite for credit rebounded and the company benefited from its improving quality of credit card holders (that had cut into earnings in previous quarters). These numbers provide evidence that the company's years of heavy investment in IT and data analysis systems as well as loss leading to attract quality long-term credit card members have begun to bear fruit.

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