With shares of Capital One Financial Corp (NYSE:COF) trading at around $57.17, is COF an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock’s Movement
Capital One Financial has been getting hammered today following poor earnings and guidance. Q4 net income came in at $843 million, or $1.31 EPS. FY2012 net income came in at $3.5 billion, or $6.16 EPS. 2012 results reflect acquisition-related accounting and the number of shares outstanding. Capital One Financial also saw seasonal expenses and margin trends. More of the same is expected in 2013 if the external environment doesn’t change. For 2013, Capital One Financial sees a modest decline in earnings being offset by a slightly higher net interest margin. Capital One Financial expects to pay a meaningful dividend in 2013.
Heading into this earnings report, 75 percent of analysts were on the Buy side. The other 25 percent recommended a Hold. There were zero analysts on the Sell side. However, that might change soon. Margins and cash flow are still healthy, which are arguably the most important factors. Let’s take a look at some other important numbers before forming an opinion…