Is Capital One Outperforming the Dow?

Capital One Financial Corporation (COF), with a market cap of $65.5 billion, 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. Based in McLean, Virginia, the company operates through three segments: Credit Card, Consumer Banking, and Commercial Banking.

Companies valued at more than $10 billion or more are generally considered “large-cap stocks”, and COF fits this criterion perfectly. As a leading player in the financial services sector, the company benefits from a large customer base and a wide portfolio of financial services suited towards different consumers.

Despite its strengths, COF has fallen 18.4% from its 52-week high of $210.67, recorded on Feb. 20. Shares of COF have declined 6.9% over the past three months, falling behind the broader Dow Jones Industrial Average’s ($DOWI) 5.3% fall during the same time frame.

Over the past six months, COF shares surged 23.7%, outperforming DOWI’s marginal gain. Moreover, shares of COF have surged 23.3% over the past 52 weeks, compared to DOWI’s 6.6% rally in the same time frame.

COF has been trading above its 200-day moving average since August and below its 50-day moving average since early-March.

COF stock surged 1.2% following its Q4 earnings release on Jan. 21. The company reported a 2% increase in its total net revenue, which amounted to $10.2 billion. This increase was primarily driven by an 8% rise in net interest income, reaching $8.1 billion, largely attributed to its substantial credit card business. Additionally, the company’s EPS came in at $3.09, surpassing the Wall Street estimates by 16.2%.

COF’s rival, Discover Financial Services (DFS), is in the lead, with its shares surging 25.1% over the past six months and 32.6% over the past 52 weeks.

Moreover, analysts remain cautiously optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from 21 analysts in coverage. Its mean price target of $218.72 represents an upside of 27.3% from the current market prices.