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Capital One announced it will pay a dividend of $0.80 per share to its owners. This payment is scheduled for December 1 for anyone who owns the stock by the end of the day on November 16. This is a routine move for the bank, which has paid a dividend every quarter for over thirty years. While the amount is unchanged, the steady payout shows the company is generating enough cash to continue returning money to its shareholders while it works on merging with Discover.
Source: Business Wire
Evercore ISI raised its price target for Capital One to $230 from $220 on Tuesday. This follows the bank's recent quarterly results, which showed it is managing its costs well while integrating the Discover network. The new target sits below the average analyst target of about $252, but it suggests the firm sees more room for the stock to rise from its current price of roughly $202.
Source: Evercore ISI
After Capital One reported its October results, we updated our revenue and profit projections for the next two years. We raised our expectations for the difference the bank earns between loan interest and deposit costs, after this margin reached 8.41% in the quarter. We have added the growth of the auto loan business to what we track, as these loans are currently growing faster than the credit card division. We also added a focus on the costs of integrating the Brex acquisition, which signals a new move into managing spending for corporate startups.
Capital One reported adjusted earnings of $6.69 per share, which was well ahead of the $5.50 analysts expected. Revenue reached $16.3 billion for the quarter, also slightly topping estimates. These results show the bank is maintaining its footing even as it works through the complex process of merging with Discover.
The integration of Discover is the central story for the company right now. By owning the Discover network, Capital One can process its own transactions rather than paying fees to Visa or Mastercard. Management noted that this transition is on track and they are starting to see the expected savings from combining the two companies. For long-term owners, the fact that profits are growing during this transition suggests the bank is managing its costs and credit risks well while it builds this new payments network.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Capital One is scheduled to release its quarterly results after the market closes today. Analysts are looking for earnings of about $5.50 per share on revenue of roughly $16.25 billion. Beyond the headline numbers, the focus remains on two areas: how many customers are falling behind on their car and card loans, and any updates on the plan to move its card business onto the Discover network. These results will provide a fresh look at whether the company is successfully managing its costs while it works to integrate its massive new acquisition.
Management has a strong record of beating their own targets, often by a wide margin. This suggests they are conservative with their forecasts and the business is growing faster than they publicly let on.
| Expectation | |
|---|---|
| EPS | $4.86 |
| Revenue | $16.60B |
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