Capital One Financial Corporation operates as the financial services holding company for the Capital One, National Association, which engages in the provision of various financial products and services in the United States, Canada, and the United Kingdom. It operates through three segments: Credit Card, Consumer Banking, and Commercial Banking. The company accepts checking accounts, money market deposits, negotiable order of withdrawals, savings deposits, and time deposits. Its loan products include credit card loans; auto and retail banking loans; and commercial and multifamily real estate, and commercial and industrial loans. The company also offers credit and debit card products; online direct banking services; and provides advisory, capital markets, treasury management, and depository services. It serves consumers, small businesses, and commercial clients through digital channels, branches, cafés, and other distribution channels located in New York, Louisiana, Texas, Maryland, Virginia, New Jersey, and California. The company was founded in 1988 and is headquartered in McLean, Virginia.

Capital One выглядит как крупный и устойчивый финансовый институт, но текущая оценка уже учитывает заметную часть позитивных ожиданий. Сильная сторона — масштаб бизнеса: выручка, активы, капитал и собственный капитал находятся на высоких уровнях и в целом растут, что поддерживает долгосрочную устойчивость. Также радуют P/S, P/B и P/FCF ниже отраслевых медиан, что указывает на более умеренную оценку по части выручки, балансовой стоимости и свободного денежного потока. Дивидендная доходность выросла до 0.44%, что добавляет инвестору регулярный доход и немного улучшает профиль акций. При этом P/E остаётся очень высоким относительно отрасли, а это означает, что рынок платит премию за будущий рост и качество прибыли. Главный сдерживающий фактор — слабая рентабельность: ROE, ROA, ROI и return on tangible equity существенно ниже отраслевых ориентиров, а это снижает аргументы в пользу более агрессивной переоценки. Маржа чистой прибыли и операционная маржа тоже заметно ниже медианы, хотя по годам виден некоторый отскок после слабых периодов. Долговая нагрузка выглядит управляемой: debt/equity около отраслевого уровня, current ratio слегка выше медианы, а ликвидность в целом не выглядит проблемной для банка. Однако quick ratio равен нулю, что для финансового сектора не является редкостью, но всё же подчёркивает специфику баланса и ограничивает пользу этого показателя. Рост net income и operating income поддерживает тезис о восстановлении операционной базы, но динамика прибыли и рентабельности пока недостаточно сильна, чтобы оправдать существенное повышение цели. В сумме картина скорее нейтрально-позитивная: бизнес крупный, оценка по части мультипликаторов местами привлекательна, но слабая эффективность капитала и высокая относительная дороговизна по прибыли ограничивают потенциал апсайда. Поэтому целевой прогноз разумно слегка снизить, сохранив осторожный взгляд на дальнейшую переоценку.

Capital One Financial Corporation

Сильный индекс, значительно упал. Быки в растерянности.

Strong index, significantly down. The bulls are confused.

Средний индекс, незначительно вырос. Рынок на стороне быков.

Medium index, slightly up. The market is on the bulls' side.

Средний индекс, значительно вырос. Увеличился приток средств в лонги.

Medium index, significantly up. The inflow of funds into longs has increased.

COF выглядит устойчиво по балансу и недорого по P/B, P/S и P/FCF, но слабая рентабельность и высокий P/E ограничивают потенциал переоценки.

Investors in Capital One Financial Corp (Symbol: COF) saw new options become available today, for the July 31st expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the COF options chain for the new July 31st contracts and identified one put and one call contract of particular interest.
The put contract at the $170.00 strike price has a current bid of $4.70. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $170.00, but will also collect the premium, putting the cost basis of the shares at $165.30 (before broker commissions). To an investor already interested in purchasing shares of COF, that could represent an attractive alternative to paying $174.66/share today.
Because the $170.00 strike represents an approximate 3% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 63%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 2.76% return on the cash commitment, or 20.18% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for Capital One Financial Corp, and highlighting in green where the $170.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $180.00 strike price has a current bid of $6.90. If an investor was to purchase shares of COF stock at the current price level of $174.66/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $180.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 7.01% if the stock gets called away at the July 31st expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if COF shares really soar, which is why looking at the trailing twelve month trading history for Capital One Financial Corp, as well as studying the business fundamentals becomes important. Below is a chart showing COF's trailing twelve month trading history, with the $180.00 strike highlighted in red:
Considering the fact that the $180.00 strike represents an approximate 3% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 53%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 3.95% boost of extra return to the investor, or 28.84% annualized, which we refer to as the YieldBoost.
The implied volatility in the put contract example is 37%, while the implied volatility in the call contract example is 42%.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 251 trading day closing values as well as today's price of $174.66) to be 31%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Further COF Research:
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

July 31st Options Now Available For Capital One Financial (COF)

In trading on Wednesday, shares of Capital One Financial Corp's 4.375% Dep Shares Non-Cumul Perp Pfd Stock Series L (Symbol: COF.PRL) were yielding above the 7% mark based on its quarterly dividend (annualized to $1.0938), with shares changing hands as low as $15.62 on the day. This compares to an average yield of 6.73% in the "Financial" preferred stock category, according to Preferred Stock Channel. As of last close, COF.PRL was trading at a 37.20% discount to its liquidation preference amount, versus the average discount of 12.41% in the "Financial" category. Investors should keep in mind that the shares are not cumulative, meaning that in the event of a missed payment, the company does not have to pay the balance of missed dividends to preferred shareholders before resuming a common dividend.
Below is a dividend history chart for COF.PRL, showing historical dividend payments on Capital One Financial Corp's 4.375% Dep Shares Non-Cumul Perp Pfd Stock Series L:
Further COF.PRL Research:
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Capital One Financial's Preferred Stock Series L Crosses Above 7% Yield Territory

Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the Vanguard Large-Cap ETF (Symbol: VV) where we have detected an approximate $206.8 million dollar outflow -- that's a 0.4% decrease week over week (from 153,017,358 to 152,422,182). Among the largest underlying components of VV, in trading today Newmont Corp (Symbol: NEM) is up about 1.9%, Lockheed Martin Corp (Symbol: LMT) is up about 1.1%, and Capital One Financial Corp (Symbol: COF) is higher by about 3.8%. For a complete list of holdings, visit the VV Holdings page » The chart below shows the one year price performance of VV, versus its 200 day moving average:
Looking at the chart above, VV's low point in its 52 week range is $272.88 per share, with $350.41 as the 52 week high point — that compares with a last trade of $347.50. Comparing the most recent share price to the 200 day moving average can also be a useful technical analysis technique -- learn more about the 200 day moving average ».
Exchange traded funds (ETFs) trade just like stocks, but instead of ''shares'' investors are actually buying and selling ''units''. These ''units'' can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand. Each week we monitor the week-over-week change in shares outstanding data, to keep a lookout for those ETFs experiencing notable inflows (many new units created) or outflows (many old units destroyed). Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.
Further VV Research:
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

VV, NEM, LMT, COF: ETF Outflow Alert

Investors in Capital One Financial Corp (Symbol: COF) saw new options become available today, for the July 24th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the COF options chain for the new July 24th contracts and identified one put and one call contract of particular interest.
The put contract at the $180.00 strike price has a current bid of $5.90. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $180.00, but will also collect the premium, putting the cost basis of the shares at $174.10 (before broker commissions). To an investor already interested in purchasing shares of COF, that could represent an attractive alternative to paying $184.40/share today.
Because the $180.00 strike represents an approximate 2% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 61%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 3.28% return on the cash commitment, or 23.93% annualized — at Stock Options Channel we call this the YieldBoost.
Below is a chart showing the trailing twelve month trading history for Capital One Financial Corp, and highlighting in green where the $180.00 strike is located relative to that history:
Turning to the calls side of the option chain, the call contract at the $190.00 strike price has a current bid of $6.80. If an investor was to purchase shares of COF stock at the current price level of $184.40/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $190.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 6.72% if the stock gets called away at the July 24th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if COF shares really soar, which is why looking at the trailing twelve month trading history for Capital One Financial Corp, as well as studying the business fundamentals becomes important. Below is a chart showing COF's trailing twelve month trading history, with the $190.00 strike highlighted in red:
Considering the fact that the $190.00 strike represents an approximate 3% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 54%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 3.69% boost of extra return to the investor, or 26.92% annualized, which we refer to as the YieldBoost.
The implied volatility in the put contract example, as well as the call contract example, are both approximately 39%.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 251 trading day closing values as well as today's price of $184.40) to be 31%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
Further COF Research:
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

July 24th Options Now Available For Capital One Financial (COF)

Enova International ENVA has put up a strong run over the past year, supported by steady execution and a business mix that is tilting toward faster-growing small business lending. The stock’s consistent earnings outperformance has reinforced that narrative.
At the same time, investors are weighing real offsets. Expense pressure, credit normalization and a balance sheet with meaningful debt keep the risk profile elevated, even as growth drivers remain intact.
ENVA’s One-Year Run vs. Industry
ENVA has outperformed its industry over the past year, helped by a backdrop of solid operating momentum and repeated earnings outperformance.
Price Performance
Image Source: Zacks Investment Research
The company has topped the Zacks Consensus Estimate in each of the last four quarters, a pattern that has helped keep sentiment constructive. Another supportive signal is estimate stability. ENVA’s 2026 earnings estimates have been unchanged over the past month, which aligns with the view that fundamentals remain durable despite the risks investors are monitoring.
Estimate Revision Trend
Image Source: Zacks Investment Research
Enova’s SMB Shift Is Reshaping the Portfolio
The portfolio mix continues to move toward small business lending. As of March 31, 2026, small business loans represented 70% of the portfolio, while consumer loans accounted for 30%.
That shift is being driven by origination strength. In the first quarter of 2026, small business originations rose 42% year over year, extending a streak of nine straight quarters with more than 20% originations growth.
ENVA’s Q1 Results Shows Momentum
Revenue execution has been a clear pillar of the story. Net revenues increased 19.7% in 2025 versus 2024, and the rising trend continued into the first quarter of 2026.
Margin performance adds an important layer. Net revenue margin was around 60% by the end of the first quarter of 2026, pointing to scaling progress while maintaining disciplined pricing.
The trade-off was costs. Operating expenses jumped 26.6% year over year to $321.8 million, and results included $2.7 million of acquisition-related expenses tied to the pending Grasshopper Bancorp transaction.
Credit trends were mixed. In the first quarter, the consolidated net charge-off ratio improved to 7.6% from 8.6% a year earlier, and the 30-plus-day delinquency ratio eased to 7.4% from 7.7%.
But broader pressure is still part of the setup. Net charge-offs rose 14.6% year over year in 2025, and delinquencies increased 11.5% over the same period. The near-term outlook still calls for continued pressure, even with improvement expected over time.
Enova’s Debt and Liquidity Put Flexibility in Focus
Balance sheet flexibility remains a key debate. As of March 31, 2026, liquidity was $1.1 billion, including cash and marketable securities plus available facility capacity, while long-term debt stood at $4.83 billion.
That combination heightens sensitivity if conditions weaken, because higher leverage can limit room to maneuver. It also raises the bar for consistent credit execution and expense control as the business scales.
Capital return is another area investors are watching closely. ENVA announced a $400 million share repurchase program in November 2025 that runs through June 30, 2027.
In the first quarter, the company repurchased $16 million of common stock. As of March 31, 2026, $32.2 million remained available under the authorization, and the buyback has been flagged as potentially unsustainable given the liquidity profile and debt level.
Enova’s Key Watch List for the Next 2 Quarters
The next two quarters should clarify whether SMB momentum can stay strong without giving back operating leverage. Investors can track the pace of small business originations and whether the multi-quarter streak of strong growth remains intact.
Expense ratios are equally important. For the second quarter of 2026, management expects marketing at 20% of revenues, operations and technology at 8%-8.5%, and general and administrative expense around 5% excluding one-time items.
Credit performance and the Grasshopper timeline round out the checklist. Watch delinquency and net charge-off trends alongside progress toward an expected second-half 2026 close. Enova peers, Capital One COF and Ally Financial ALLY are also facing asset quality pressure. Both COF and ALLY’s provision for credit losses rose year over year in the first quarter of 2026 and expected to remain elevated in the near term given persistent inflationary pressure.
ENVA carries a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Enova Stock Outlook: What's Driving Growth and Key Risks Ahead

Enova International ENVA is moving beyond its traditional fintech playbook with a definitive agreement to acquire Grasshopper Bancorp for about $369 million.
The logic is straightforward: pair Enova’s online consumer and small business lending engine with a digital-first banking platform and move toward a more unified banking framework. That “why now” matters because the company is leaning into momentum in small and medium business lending while looking to widen product reach and improve funding flexibility.
ENVA’s Grasshopper Deal Is a Strategic Inflection
The Grasshopper transaction brings together two complementary models. Enova’s core strength is digital lending across consumer and small business categories, while Grasshopper contributes digital banking infrastructure. Management’s goal is not just to bolt on another channel. It is to operate the combined business under a unified banking framework that can support lending and deposit products through one platform.
That framework is the strategic pivot. Enova has scaled its small business franchise quickly, with small business loans representing 70% of the portfolio as of March 31, 2026. Bringing a digital bank into the structure creates a path to broaden distribution and build a funding base that is less dependent on capital markets over time.
A central practical benefit is the national bank charter embedded in the Grasshopper platform. The combination is positioned to broaden access to both lending and deposit products, which matters for a business that has historically operated through online channels and bank partnership programs.
The expansion angle is also geographic and segment-driven. The platform is expected to help expand the product suite across more U.S. states and customer segments. At the same time, the deal is framed as adding diversification across industries, products, loan terms, and geography.
ENVA’s Synergy Targets and Earnings Accretion Map
Enova is putting measurable targets behind the strategy. The company expects revenue synergies of $175 million to $230 million within two years after the deal closes. It is also targeting annual net income uplift of $125 million to $220 million within two years post-close.
The earnings trajectory is laid out in adjusted earnings per share terms. Enova expects adjusted earnings per share accretion to exceed 15% in the first year after closing, and to rise above 25% once synergies mature. Those targets set a clear scoreboard for investors. Early progress should show up in revenue traction and product expansion, while the later step-up depends on execution and the ability to scale within the combined framework.
The most important shift may be funding economics. Grasshopper’s deposit base is described as a lower-cost funding source estimated to be 300 to 400 basis points cheaper than Enova’s existing securitization funding. If those spread holds, it can change unit economics in lending by supporting more competitive pricing or better risk-adjusted returns.
It can also improve balance sheet resilience. A deposit base can provide a steadier funding channel than securitization markets, particularly during periods of volatility. Importantly, the strategy is positioned as growth and funding synergy rather than a plan that depends on aggressive cost cutting. That framing matters because it suggests management is aiming to expand capability and capacity, not simply shrink expenses to hit targets.
ENVA’s Timeline, Approvals, and Key Milestones
For the thesis to work, the deal must clear several gates. The acquisition is subject to regulatory approvals, including from the Office of the Comptroller of the Currency and the Federal Reserve, as well as approval from Grasshopper shareholders. If those conditions are met, the close is anticipated in the second half of 2026.
A practical milestone watchlist starts with approval progress and then shifts to integration execution. Investors will also want to monitor whether expense pressure and credit trends remain contained during the transition, given Enova’s recent rise in operating expense ratios and continued credit-quality pressure.
Enova’s What-To-Watch List as the Deal Progresses
The first checkpoint is regulatory progress and the sequencing of required approvals. Clear milestones, timely filings, and transparent updates can reduce uncertainty around the closing window.
Next is evidence of funding mix improvement. Investors will want to see whether deposits begin to play a larger role and whether the implied 300–400 basis point cost advantage translates into reported funding costs and stronger lending economics.
Originations will be another key indicator, particularly as the product suite expands and the company tests broader reach across states and customer segments. Finally, watch whether expense intensity moderates as integration work stabilizes and whether early revenue synergies begin to show up in performance, validating the longer-term earnings accretion pathway.
ENVA’s Zacks Rank and Price Performance
ENVA carries a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Enova shares gained 69.1% in the past year compared with the industry’s rise of 22.5%.
Price Performance
Image Source: Zacks Investment Research
ENVA Peers Efforts to Expand Inorganically
Capital One’s COF opportunistic buyouts over the years have been driving its revenues. In January 2026, it announced a deal to acquire Brex for $5.15 billion, which is expected to be closed in the middle of 2026. In May 2025, COF 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 (the deal is expected to be more than 15% accretive to adjusted EPS by 2027).
Sallie Mae SLM has made efforts to expand its business operations on the back of investments in varied product offerings and inorganic activities. In 2023, the company acquired several vital assets, technology, intellectual property, and the experienced staff of Scholly, a scholarship publishing and servicing platform. In 2022, Sallie Mae closed the deal with Epic Research LLC to acquire a digital marketing and education solutions company, Nitro College. Such inorganic moves are likely to aid SLM in becoming a holistic education solutions provider for students and drive loan originations for the company.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
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SLM Corporation (SLM) : Free Stock Analysis Report
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Enova's Bank Deal Trend: How It Could Shift Its Funding Model?

Legendary investor Warren Buffett advises to be fearful when others are greedy, and be greedy when others are fearful. One way we can try to measure the level of fear in a given stock is through a technical analysis indicator called the Relative Strength Index, or RSI, which measures momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.
In trading on Wednesday, shares of Capital One Financial Corp (Symbol: COF) entered into oversold territory, hitting an RSI reading of 29.8, after changing hands as low as $177.65 per share. By comparison, the current RSI reading of the S&P 500 ETF (SPY) is 68.0. A bullish investor could look at COF's 29.8 RSI reading today as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side. The chart below shows the one year performance of COF shares:
Looking at the chart above, COF's low point in its 52 week range is $174.98 per share, with $259.635 as the 52 week high point — that compares with a last trade of $177.62.
Further COF Research:
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

RSI Alert: Capital One Financial (COF) Now Oversold

In the latest look at the underlying components of the S&P 500 ordered by largest market capitalization, Capital One Financial Corp (Symbol: COF) has taken over the #95 spot from CVS Health Corporation (Symbol: CVS), according to The Online Investor.
Market capitalization is an important data point for investors to keep an eye on, for various reasons. The most basic reason is that it gives a true comparison of the value attributed by the stock market to a given company's stock. Many beginning investors look at one stock trading at $10 and another trading at $20 and mistakenly think the latter company is worth twice as much — that of course is a completely meaningless comparison without knowing how many shares of each company exist. But comparing market capitalization (factoring in those share counts) creates a true "apples-to-apples" comparison of the value of two stocks. In the case of Capital One Financial Corp (Symbol: COF), the market cap is now $116.95 billion, versus CVS Health Corporation (Symbol: CVS) at $116.08 billion.
Below is a chart of Capital One Financial Corp versus CVS Health Corporation plotting their respective size rank within the S&P 500 over time (COF plotted in blue; CVS plotted in green):
Below is a three month price history chart comparing the stock performance of COF vs. CVS:
Another reason market capitalization is important is where it places a company in terms of its size tier in relation to peers — much like the way a mid-size sedan is typically compared to other mid-size sedans (and not SUV's). This can have a direct impact on which mutual funds and ETFs are willing to own the stock. For instance, a mutual fund that is focused solely on Large Cap stocks may for example only be interested in those companies sized $10 billion or larger. Another illustrative example is the S&P MidCap index which essentially takes the S&P 500 index and "tosses out" the biggest 100 companies so as to focus solely on the 400 smaller "up-and-comers" (which in the right environment can outperform their larger rivals). So a company's market cap, especially in relation to other companies, carries great importance, and for this reason we at The Online Investor find value to putting together these rankings daily.
Examine the full COF market cap history vs. the full CVS market cap history.
At the closing bell, COF is down about 1.8%, while CVS is down about 0.3% on the day Monday.
Further COF Research:
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Capital One Financial Now #95 Largest Company, Surpassing CVS Health

Key Points
Capital One is best known for its credit cards, with a business focus on lower-credit-quality customers.
The company targets similar customers for auto loans.
While lower-credit-quality customers can be profitable in good times, bad times can be very painful.
Capital One (NYSE: COF) is changing its business model in a significant way following its acquisition of Discover. The key shift is that it will now issue credit cards and process credit card transactions, which generates reliable fee income. Other than that, the company's core focus on lending to lower-credit-quality customers remains in place. But as this big business shift is underway, Capital One's auto lending trends are surprisingly positive news.
Capital One: High risk and high reward
Lower-credit-quality customers are willing to pay higher interest rates for access to debt. That is true with both credit cards, which are effectively revolving credit facilities, and with car loans, which are longer-term asset-backed loans. Auto loans have a history of being particularly risky during recessions, when customers' finances are stretched.
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Since a large chunk of money is already out the door, the only option to recoup losses is to repossess the car. That is not an easy or pleasant experience for anyone involved, since the repossessed car will need to be resold to extract any value it may have. Credit card balances generally aren't as large as those for a car loan, so individually they don't pose the same risk.
Watching Capital One's car loans
Essentially, Capital One's car loans can serve as an important leading indicator of credit risk. This is why the business, while smaller than its credit card operation, is worth watching very closely. Right now, the risk doesn't seem all that high, even though consumers are tightening their budgets amid rising inflation. And the fact that high oil prices have some on Wall Street worried about a global recession.
In the first quarter of 2026, auto charge-offs fell 18 basis points from the fourth quarter of 2025. While they were up nine basis points year over year, they were still a fairly reasonable 1.64%. In April, the figure was even better at 1.2%. So even when there is a problem with an auto loan, the company is managing to recoup much of its loss. Non-performing auto loans, meanwhile, amounted to just 0.55% of its loan book, down from the fourth quarter and the year-ago period. That figure held steady in April.
All in, Capital One's auto loan portfolio isn't screaming that the bank's credit risks are rising. That's a positive sign for investors, but one that you should continue to monitor. When the economy turns south, which it will eventually do at some point, the bank's auto loans could be where the impact starts to hit first. A good indicator of that risk would likely show up first in the 30-day delinquency rates, but those were down sequentially and year over year for auto loans in the first quarter, as well, with an even further decline in the Month of April.
Should you buy stock in Capital One Financial right now?
Before you buy stock in Capital One Financial, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Capital One Financial wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $463,900!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,294,401!*
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*Stock Advisor returns as of May 31, 2026.
Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool recommends Capital One Financial. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Capital One's Auto Loan Trends Are Quietly Improving. Why It Matters for the Stock.

Key Points
American Express and Visa operate different business models, with the former capturing all the economics of a transaction.
Visa's capital-light setup supports substantial profits and capital returns, but its valuation is higher.
These companies each possess a powerful network effect that supports continuing success.
Consumer spending represents a whopping 70% of U.S. gross domestic product. So it makes sense for investors to find ways of building portfolio exposure to companies that contribute to this key economic metric.
American Express (NYSE: AXP) and Visa (NYSE: V) are solid examples of businesses that benefit from consumer spending. During the past decade, both have outperformed the S&P 500 index (as of May 28), with the former doing much better than the latter.
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These financial stocks give investors two different ways to bet on premium consumer spending. Here's what you need to know.
These are two different business models
First, it's worth taking the time to understand how these business models work. They aren't the same.
American Express is a closed-loop payment system. Only American Express cards can use the network. But the business captures all of the economics of a typical transaction, collecting fees from merchants and cardholders while earning interest on revolving balances.
This company is known to target an affluent clientele. It primarily leans on a spend-centric model that thrives when its customers use their cards.
On the other hand, Visa is an open-loop system. It doesn't actually extend credit, leaving this activity to its partner financial institutions, which act as lenders. Consequently, Visa operates as a toll booth, collecting tiny fees anytime payments run through its network.
There are Visa-branded cards that serve people across income categories. However, the payment network has a strong position at the premium end. JPMorgan Chase's Sapphire Reserve and Capital One's Venture X credit cards, for example, target wealthier customers and run on the Visa network.
Financial metrics and valuation
American Express resembles a traditional bank, as it has to manage its loan portfolio. This can make its financial performance more cyclical and more exposed to macroeconomic factors such as interest rates.
Because Visa doesn't lend, it operates with a capital-light approach since funds don't need to be held in reserve to cover potential losses. And it avoids credit risk, making it more stable.
Therefore, its profits are impressive. During the past five years, Visa's quarterly operating margin averaged a superb 67.3%.
This allows the business to return a lot of capital to shareholders. During the fiscal second quarter ended March 31, Visa paid $1.3 billion in dividends and repurchased $7.9 billion worth of stock.
American Express' quarterly operating margin averaged 20.6% during the trailing-five-year period. This is not remotely close to Visa's operating margin.
But the company also pays a dividend yield of 1.2% right now compared with Visa's 0.8%. And its share buybacks totaled $1.9 billion in Q1.
Investors should look at growth trends as well. During the past five years, American Express' diluted earnings per share (EPS) increased at a respectable compound annual rate of 9.3%. This is driven by new card sign-ups and greater payment volume.
Visa's diluted EPS rose at a yearly clip of 17.9% during the last five years. Better growth and margins, unsurprisingly, support its higher valuation multiple. Visa shares trade at a price-to-earnings (P/E) ratio of 28.8. American Express' P/E multiple sits at 19.9.
Which financial stock is right for you?
It's important for interested investors to understand that both of these are high-quality businesses. Each possesses a powerful network effect that supports its wide economic moat. I don't believe they face a threat of disruption, underscoring how critical they are to the smooth functioning of commerce.
Investors who are turned off by Visa's more expensive valuation will gravitate to American Express as a possible portfolio addition. But the cheaper price tag comes with credit risk, as mentioned, adding exposure to the economic cycle.
Investors who want to own a wildly profitable and steady business, which might justify the higher P/E ratio, will pick Visa.
Should you buy stock in American Express right now?
Before you buy stock in American Express, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and American Express wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $463,900!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,294,401!*
Now, it’s worth noting Stock Advisor’s total average return is 978% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of May 31, 2026.
JPMorgan Chase is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends American Express, JPMorgan Chase, and Visa. The Motley Fool recommends Capital One Financial. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Capital One Financial Corporation

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