Capital One Issues EPS Guidance For The First Time In Recent Memory

Analysts at Barclays can't remember the last time Capital One Financial Corp. (NYSE: COF) issued guidance. But when the company did just that in conjunction with its second-quarter earnings report on Thursday, it prompted the firm's Jason Goldberg to maintain an Overweight rating on the stock with an unchanged $105 price target.

Q2 In Review

Capital One Financial earned $1.94 per share in the second quarter, 3 cents higher than what the Street was expecting, Goldberg commented in a research report (see his track record here).

Perhaps more important, the report demonstrated several improvements from the prior quarter, including:

1. Stable net interest income as average earnings assets stabilizing.
2. NIM (net interest margin) remained at 6.88 percent.
3. A higher fee income from service charges and interchange.
4. A slight decline in core expenses.
5. A lower loan loss provision with a lower loan loss reserve build.

Looking Forward

The financial company's management guided its 2017 earnings per share to grow by 7 percent to 11 percent, which implies an EPS range of $7.70 to $8.00, the analyst added. This compares favorably to the Street's current EPS estimate of $7.50 Goldberg's EPS estimate was risen from $7.35 to $7.45.

He explained that a higher than originally expected loan loss provision will only partially offset by a lower than expected efficiency ratio while his 2018 EPS estimate remains unchanged at $8.85.

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