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
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

10 Cheapest Bank Stocks for 2013

3. Capital One Financial


Shares of Capital One Financial (COF) closed at $57.10 Friday, returning 36% year-to-date, following a flat return during 2011.

The shares trade for 1.5 times tangible book value, and for 8.1 times the consensus 2013 EPS estimate of $7.01. The consensus 2014 EPS estimate is $7.38.

2012 has been a transformative year for Capital One, with the company's acquisition of ING Direct (USA) in February, a $1.25 billion common equity raise in March, and the purchase of HSBC's (HBC) U.S. credit card portfolio in May, for a premium of $2.5 billion. The ING deal included roughly $80 billion in deposits gathered over the Internet, along with $41 billion in loans, providing plenty of liquidity for the $28.2 billion in credit card loans acquired from HSBC.

The third quarter was the first "clean quarter" for Capital One during 2012, as the company moved past the bulk of one-time items related to the acquisitions. Third-quarter earnings available to common shareholders totaled $ $1.17 billion, or $2.01 a share, excluding income from discontinued operations.

The company's net interest margin was 6.97% in the third quarter, increasing from 6.04% the previous quarter (when the company's margin declined because of the ING acquisition, without yet realizing a full quarter's benefit from the HSBC cards), but narrowing from 7.40% a year earlier. The year-over-year narrowing of the margin is in line with the industry, in the prolonged low-rate environment.

Capital One's third-quarter return on average assets was 1.60% and its return on average tangible equity was 21.48%, compared to ROA of 1.72% and ROTCE of 22.58% a year earlier, moving the company back to its expected strong earnings level as a lender focused on card lending.

FBR analyst Paul Miller on Dec. 19 included Capital One among his list of "stocks to own for 2013," with a price target of $72, saying the company is "one of our favorite names due to its compelling valuation ($72 target = 10x our FY13 EPS estimate and 1.1x book value), expected resumption of the dividend, and increased earnings power."

FBR estimates that Capital One will earn $7.15 a share in 2013, followed by EPS of $7.25 in 2014.

COF ChartCOF data by YCharts

Interested in more on Capital One? See TheStreet Ratings' report card for this stock.

Stock quotes in this article: BAC, C, JPM, RF, COF, DFS, PNC, BPOP, OFG, HMST, FBC 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs