Capital One Financial

(COF)
Whats in your wallet?

Capital One accredits their success to their people,

culture, and customers.

Management Team

BOARD OF DIRECTORS

Executives

Company Analysis

Percentages and growth

SWOT & Five Forces

Strengths:
Fortune 500 company
Wide variety of financial
products
Also in Canada and the UK
Weaknesses:
Not enough worldwide
exposure
Large amount of general credit
card complaints
Opportunities:
Better expansion to more
geographic areas
More acquisitions/ strategic
alliances to grow
Can diversify into other
domains of banking
Threats:
Strong economic dependability

Name

Shares

Date Reported

2,593,005

Mar 8, 2016

SCHNEIDER RYAN M.

182,790

Mar 8, 2016

CRAWFORD STEPHEN
S

156,127

Jun 22, 2016

SANJIV YAJNIK

150,747

Mar 8, 2016

FINNERAN JOHN G JR

142,216

Mar 8, 2016

FAIRBANK RICHARD D

Holder

Shares

Date Reported

% Out

Value

Dodge & Cox

Inc

49,231,610

Jun 29, 2016

9.61%

3,126,699,452

Vanguard
Group, Inc.
(The)

30,695,379

Jun 29, 2016

5.99%

1,949,463,458

FMR, LLC

27,299,196

Jun 29, 2016

5.33%

1,733,771,883

Capital World
Investors

21,541,200

Jun 29, 2016

4.21%

1,368,081,568

State Street
Corporation

20,562,898

Jun 29, 2016

4.02%

1,305,949,610

Acquisitions
Acquisition of the Healthcare Financial Services business of
General Electric Capital Corp 12/01/2015.
Recorded approximately $9.2B in assets, including $8.3B
of loans
Acquisition of Beech Street Capital, a privately-held national
originator and servicer of Fannie Mae and Freddie Mac
commercial real estate loans 11/01/2013.
Mortgage servicing portfolio of approximately $10B of
loans
Disposition of the Best Buy private label co-branded credit
card portfolio to Citibank 09/06/2013.
Received $6.4B for the net portfolio assets

Q3 2016 Earnings Call

Released October 25 2016

Beat analysts projected 6.36B expected revenue to an actual 6.46B in total
revenue
Fell short on EPS projections of 1.94 by actual of 1.90.
Earnings decline from worsening in operating margins as well as one-time
expenses.
Company recorded UK Payment Protection Insurance customer refund
reserve of $63M. Excluding this adjustment, revenue was $1.1B with EPS
totaling $2.03.
Compared to Q3 2015 showed revenues of $1.1B and $1.98 EPS. Q3 2014
showed revenues of $1.1B with $1.86 EPS.
Earnings call from Q3 2015 also showed the company recording a UK
Payment Protection Insurance customer refunds
Net interest income margins widened from 81.02% to 81.67 % compared to
the same period last year.

Financials

Increasing revenue past 6 years (Except 2014 -0.42)

2006-2009 revenue not steadily growing
ROE has slowly declined from 2011 (11.11 7.95)
Net Income shows declining growth from 2014 (4,361
3,790)
Fiscal year
Revenue
Return on
Equity %
Net income
Net cash
provided by
operating
activities

2011-12

2012-12

2013-12

2014-12

2015-12

16,279

21,396

22,384

22,290

23,413

11.11

9.94

9.94

10.01

8.39

3147

3517

4159

4428

4050

7455

9060

9984

9304

10127

Financial valuation

Projected cash flow analysis

Year

2016

2017

2018

2019

2020

Operating CF

10,705,352.00

11,165,682.14

11,645,806.47

12,146,576.15

12,668,878.92

Growth rate

4.30%

WACC

5.30%

DCF

$49,876,273.93

Shares Outstanding

512.10

Implied Share Price

$97.40

Current Stock Price

$75.43

Premium/Discount

22.56%

Technical Analysis

Q3 2015: Capital One Reports Third Quarter 2015 Net Income of $1.1 billion, or $1.98 per
share
Q4 2015 (Released Jan 26 2016): Capital One Reports Fourth Quarter 2015 Net Income of
$920 million, or $1.58 per share
Q1 2016: Capital One Reports First Quarter 2016 Net Income of $1.0 billion, or $1.84 per
share
Q2 2016 (Released July 21): Capital One Reports Second Quarter 2016 Net Income of
$942 million, or $1.69 per share

COFs Portfolio

Card usage highest in 4th

quarter

Analysts Outlook

Industry Analysis

Industry: Finance &

Finance/Rental/Leasing
Main competitors American Express, Bank of America,
Discover Financial Services, Citigroup Inc.

Industry Outlook

Industry compared
Industry

Capital One Financial

Industry from a
macroeconomic view
Mortgage loans originations not
showing strong growth
Auto loans showing tremendous
growth
Credit card volume spending
shows growth

Recommendation

Sell overpriced VISA stock

Buy overweight Capital One Financial Stock
Also look into Discover Financial Services as another
financial for a potential buy