9. Capital One Financial
Shares of Capital One Financial (COF - Get Report) closed at $58.52 Friday, returning 1% this year, following a 37% return during 2012. The shares trade for 1.2 times tangible book value, according to Thomson Reuters Bank Insight, and for 8.9 times the consensus 2014 EPS estimate of $6.61. The consensus 2013 EPS estimate is $6.35.
Following a dismal fourth quarter, when the company missed earnings and revenue estimates, blaming seasonal factors but also reducing its 2013 outlook based on the results, Capital One came back with first-quarter results that beat analysts' expectations.The company reported first-quarter net income of $1.1 billion, or $1.79 a share, compared to $843 million, or $1.41 a share in the fourth quarter, and $1.4 billion, or $2.72 a share, in the first quarter of 2012. The year-earlier period included a $594 million bargain purchase gain from the acquisition of ING Direct (USA). Excluding that gain, first-quarter 2012 earnings were $809 million, or $1.56 a share, underscoring Capital One's success in the most recent quarter. The company's first-quarter ROA was 1.41% and its return on average tangible common equity was a solid 15.56%. Oppenheimer analyst Oppenheimer analyst Chris Kotowski rates Capital One "outperform," with a 12- to 18-month price target of $69.00. In a note to clients late on April 18, the analyst said that "COF's 1Q13 was a tad better than we expected and way better than our worst fears." While the first-quarter results were boosted by a release of loan loss reserves that added 23 cents a share to the bottom line, the results were "still a dime better than expected," Kotowski wrote. Kotowski estimates Capital One will earn $6.71 a share this year, with EPS rising to $6.86 in 2014. "COF remains one of our top picks," he wrote. "Operating