This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Capital One's Shares Are Still Cheap

NEW YORK ( TheStreet) -- Capital One Financial (COF - Get Report) is among the cheapest big bank stocks out there and the second half of 2012 looks to be relatively clean following a rocky second quarter.

Back in December I called Capital One the top bank stock pick for 2012, and the shares returned 34% through Tuesday's close at $56.47, which beats three of the "big four" U.S. banks, with the exception being Bank of America (BAC - Get Report), which returned 48% year-to-date, closing at $8.19 on Tuesday.

Rounding out the big four, shares of JPMorgan Chase (JPM - Get Report) returned 17% year-to-date, to close at $38.04 on Tuesday, while Citigroup (C - Get Report) returned 17% to close at $30.73, and Wells Fargo (WFC - Get Report) returned 27%, closing Tuesday at $34.38.

Of course, Bank of America's strong year-to-date performance follows a 58% decline during 2011, when Capital One had a flat return, that compared rather well with a 25% decline for the KBW Bank Index (I:BKX). The index was up 21% year-to-date, through Tuesday's close at 47.47, with all but two of the 24 index components showing year-to-date gains. Citigroup's shares have been recovering from a 44% drop in 2011.

JPMorgan has bounced back from a 20% decline last year, although the shares are down 7% since May 10, when CEO James Dimon estimated $2 billion in trading losses from hedging activity by the company's Chief Investment Office. While the CIO's second-quarter trading losses ended up totaling $4.4 billion, JPMorgan reported second-quarter earnings of $5 billion. The company now expects to restart its share repurchase program in 2013.

Wells Fargo fared relatively well during 20111, with shares declining 10%, and is among the best earnings performers among large U.S. banks, with returns on average assets ranging between 1.27% and 1.40% over the past four quarters, according to Thomson Reuters Bank Insight.

Looking at current valuations, Capital One is still one of the cheapest of the large banks, relative to earnings estimates. The shares trade for 8.2 times the consensus 2013 earnings estimate of $6.92, among analysts polled by Thomson Reuters. Among the 24 components of the KBW Bank Index, only two names have lower forward price-to-earnings ratios. Citigroup trades for 6.8 times the consensus 2013 EPS estimate of $4.54, while JPMorgan Chase trades for 7.3 times the consensus 2013 EPS estimate of $5.23.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
JPM $63.20 0.00%
WFC $49.98 0.00%
COF $72.39 0.00%
BAC $14.56 0.00%
C $46.28 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs