Capital One (COF) Up 4.4% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Capital One's recent earnings report indicates strong performance with adjusted earnings surpassing estimates, driven by higher net interest income and non-interest income, despite rising expenses [2][5][6] Financial Performance - Q4 2024 adjusted earnings were $3.09 per share, exceeding the Zacks Consensus Estimate of $2.66 and up from $2.24 in the prior-year quarter [2] - For 2024, adjusted earnings reached $13.96, beating the consensus estimate of $13.53 and reflecting a 12% year-over-year increase [4] - Total net revenues for Q4 were $10.19 billion, a 7% increase from the prior-year quarter, surpassing the consensus estimate of $10.16 billion [5] - For 2024, total net revenues grew 6% to $39.1 billion, also exceeding the consensus estimate of $39.08 billion [5] Income and Expenses - Net interest income (NII) increased 8% year over year to $8.1 billion, with net interest margin (NIM) expanding by 30 basis points to 7.03% [5] - Non-interest income grew 5% to $2.09 billion, driven by higher service charges and net interchange fees [6] - Non-interest expenses rose 7% year over year to $6.09 billion, attributed to increases in almost all cost components [6] Credit Quality - Provision for credit losses was $2.64 billion, down 8% from the prior-year quarter [8] - The 30-plus-day-performing delinquency rate decreased by 2 basis points to 3.69%, while the net charge-off rate increased by 38 basis points to 3.59% [8] Capital and Profitability - As of December 31, 2024, the Tier 1 risk-based capital ratio improved to 14.8% from 14.2% a year ago [9] - Return on average assets was 0.90%, up from 0.60% in the year-ago period, and return on average common equity increased to 7.16% from 5.03% [9] Share Repurchase - During the reported quarter, Capital One repurchased 0.88 million shares for $150 million [10] Market Outlook - Estimates for Capital One have trended downward recently, indicating a potential shift in market sentiment [11][13] - The stock currently holds a Zacks Rank 3 (Hold), suggesting an expectation of in-line returns in the coming months [13]