- Shares of Capital One Financial(COF - Get Report) closed at $55.19 Friday, declining 5% this year, with investors concerned over a relatively weak fourth quarter and subdued 2013 outlook, with declining credit card loan balances. But the stocks trades for 8.2 times the consensus 2014 earnings estimate of $6.71 among analysts polled by Thomson Reuters. That is by far the cheapest forward P/E for any of the 24 components of the KBW Bank Index. The company on Thursday announced it would raise its quarterly dividend to 30 cents a share from 5 cents.
- American Express(AXP - Get Report) closed at $66.09 Friday, returning 15% year-to-date. The shares trade for 12.4 times the consensus 2014 EPS estimate of $5.33. The relatively high P/E multiple in the current market environment reflects a very strong earnings track record. The company reported a 2012 return on average equity of 23.1%, declining from 27.7% in 2011, as its release of loan loss reserves declined. The company on Friday raised its quarterly dividend to 23 cents a share from 20 cents, and announced Federal Reserve approval for up to $4.2 billion in share buybacks through the first quarter of 2014.
- Shares of Discover Financial(DFS - Get Report) closed at $44.14 Friday, returning 15% this year. The shares trade for 9.4 times the consensus fiscal 2014 EPS estimate of $4.69. The company's return on average assets was 3.23% in fiscal 2012, and its return on average tangible common equity was 26.8%, according to Thomson Reuters Bank Insight. The company on Friday said it would raise its quarterly dividend to 20 cents a share from 14 cents, and also announced a $2.4 billion share buyback program.
- Visa(V - Get Report) closed at $158.55 Friday, returning 5% year-to-date, and trading for 18.7 times the consensus fiscal 2014 EPS estimate of $8.51. KBW analyst Sanjay Sakhrani rates Visa "outperform," with a price target of $186.00. After the company announced its fiscal first quarter results, Sakhrani on Feb. 7 said in a report that "volumes came in better than our expectations for the quarter," and were "trending positively" for the fiscal second quarter. Visa in February announced a new $1.75 billion share buyback program, increasing its stock repurchase authorization to nearly $3 billion.
- Shares of Mastercard(MA - Get Report) closed at $519.37, returning 6% year-to-date. The shares trade for 17.2 times the consensus 2014 EPS estimate of $30.22. Juneja also rates Mastercard "outperform," with a price target of $623.00. Chris McWilton, Mastercard's president for North American markets said at a conference last week that U.S. processing volumes were up 4% year-over-year in February, slowing from a 6% increase the previous month, with delayed income tax refunds being a factor in the slowing growth rate. Sakhrani on Wednesday said Mastercard's growth numbers "generally showed a deceleration in volumes and transactions, similar to other industry indicators."
5 Defensive Financial Stocks From KBW
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