Capital One's $35 billion all-stock merger with Discovery Financial makes it the eighth-largest U.S. bank and expands into the payment network vertical. Despite macroeconomic uncertainties, the strength of U.S. consumers and rising consumer sentiment support a bullish outlook for Capital One's core credit card business. I rate Capital One as a "buy," due to its valuation, and with just two rate cuts expected in 2025, their asset-sensitive balance sheet is likely to be less affected.
COF rides high on Discover buyout, strong card business and rising NII, but asset quality and rising costs remain woes.
apital One Financial Corporation (NYSE:COF ) Morgan Stanley US Financials, Payments & CRE Conference Call June 10, 2025 2:30 PM ET Company Participants Jeff Norris - Senior Vice President of Finance Richard D. Fairbank - Founder, Chairman, CEO & President Conference Call Participants Jeffrey David Adelson - Morgan Stanley, Research Division Jeffrey David Adelson All right, everybody.
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COF rides on the credit card momentum and Discover deal gains, but rising costs and asset quality issues cloud the outlook.
Shares of Capital One Financial Corporation COF have lost 5.9% since the completion of the acquisition of Discover Financial Services on May 18. The $35-billion deal reshapes the landscape of the credit card industry, creating a behemoth (in terms of loan volume).
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COF agrees to pay a fine to settle a lawsuit accusing the company of deceiving savings account depositors.
COF buys Discover, creating a behemoth in the credit card industry. The acquisition boosts its competitive edge and expands its share of consumer card spending.
Capital One will be even more focused on credit-card lending now that it has completed the Discover deal.
Fifteen months after it was announced, Capital One's $35 billion acquisition of Discover is official. The deal, finalized Sunday (May 18), creates the largest credit card issuer in terms of loan volume in the U.S.
Capital One will reportedly pay $425 million to settle a lawsuit accusing it of cheating savings account depositors. That's according to a report by Reuters on Friday (May 16), citing court documents.