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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

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.

9 of 11

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.
Submit an article to us!
DOW 17,098.45 +18.88 0.11%
S&P 500 2,003.37 +6.63 0.33%
NASDAQ 4,580.2710 +22.5760 0.50%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

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