William Blair Reiterates Market Perform On Capital One Following 2Q14 Earnings

In reaction to Capital One’s (COF) second-quarter earnings release, William Blair analyst Robert Napoli reiterated a Market Perform rating. No price target was assigned. The company reported an EPS of $2.04 compared to William Blair’s estimate of $1.87 and consensus of $1.80. 

Napoli wrote, “he upside versus our estimate was driven primarily by a reserve release of $0.13 versusour $0.02 estimate. The reserve release was driven by very strong credit trends acrossthe board. A lower tax rate added $0.05 versus our estimate. Commercial loan growthof 18% was stronger than we expected, but was offset by lower loan yields. Loan growth overall showed very good trends, with the beneficial effects partly offset by lower loan yields. Lower loan yields are partly due to Capital One opting to more floating rate loans, loan mix, and some competition”.

The analyst concluded, “We actually feel better about Capital One than we have in a long time. The valuation is not challenging at 11 times our 2015 earnings estimate and 1.5 times our estimate of end of 2015 tangible book value. We just prefer the more payments-related card names in our universe on a relative basis, as they are far less credit sensitive”.

According to TipRanks.com, which measures analysts and bloggers success rate based on how their calls perform, analyst Robert Napoli has a 25.5% average return and a 67% success rate. Napoli is ranked #714 out of 3222 analysts. 

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