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Capital One

(COF) - Get Capital One Financial Corporation Report

was the winner among the largest U.S. financial names on Thursday, with shares 3% to close at $51.72.

The broad indexes ended mixed, after the U.S. Labor Department reported 370,000 first first-time jobless claims for the week ended May 19, improving from an upwardly revised 372,000 the previous week. Meanwhile, the U.S. Commerce Department reported that durable goods orders rose 0.2% in April, which was less than the 0.5% increase expected by economists polled by Thomson Reuters. Durable goods orders in March in March declined by a revised 3.7%.

Also on Thursday, the Federal Deposit Insurance Corp. reported that the U.S. banks and thrifts earned a combined $35.3 billion during the first quarter, for the industry's

best performance

since the second quarter of 2007.


KBW Bank Index


rose slightly, to close at 44.19.

Capital One's shares have now returned 23% year-to-date, following a flat return 2011.

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The shares trade for 7.5 times the consensus 2013 earnings estimate of $6.86, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $6.40.

Capital One is in the midst of a major transformation, following its acquisition of ING Direct (USA) in February, a $1.25 billion common equity raise in March, followed by the purchase of HSBC's $28.2 billion U.S. credit card portfolio on May 1, for a premium of $2.6 billion.

After the HSBC card deal was completed, Bank of America Merrill Lynch analyst Kenneth Bruce said on May 2 that the acquisition would "expand COF's U.S. credit card operations and meaningfully improve its penetration in the private-label credit card segment," and that "the transaction should prove accretive," to earnings, although the analyst suspects that "much of the initially forecast accretion will be lost in the accounting of both ING Direct and HCBC" in the second quarter.

Bruce rates Capital One a "Buy," with a price objective of $63, and estimates that the company will earn $6.30 a share this year, followed by earnings of $6.92 a share in 2013.

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


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Written by Philip van Doorn in Jupiter, Fla.

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Philip van Doorn


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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.