Story updated with additional analysis.NEW YORK ( TheStreet) -- Capital One's ( COF - Get Report) deal to acquire HSBC's ( HBC) U.S. credit card business shows that the company knows where the action is. And investors get it. The shares are up slightly to $41, even as the market rout of the financial sector has resumed.
In addition to the 10% pullback for the shares over the past week -- factoring-in Tuesday's 8% rise in the share price -- the shares were valued at a low 1.3 times a tangible book value of $31.41 a share, according to SNL Financial. The shares were trading for just six times the consensus 2012 earnings estimate of $6.08. That's an amazingly cheap valuation to forward earnings. The largest U.S. banks are also trading at low forward price multiples, but none are as profitable as Capital One. Shares of Bank of America ( BAC - Get Report) closed at $7.60 Tuesday, and were trading for just four times the consensus 2012 earnings estimate of $1.51 a share. The company booked an $8.8 billion second-quarter loss, and its operating return on average assets (ROAA) for the 12-month period ended June 30, was a negative 0.65%, according to SNL. JPMorgan ( JPM - Get Report) closed at $36.40 Tuesday, or six times the consensus 2012 EPS estimate of $5.68. The company's 12-month ROA was 0.96%, according to SNL. Wells Fargo ( WFC - Get Report) closed at $24.78, for a forward P/E of 6.5, based on the consensus 2012 EPS estimate of $3.51. The company's 12-month ROA was 1.20%. Citigroup ( C - Get Report) closed at $31.82 Tuesday, or five times the consensus 2012 earnings estimate of $5.13, with a 12-month ROA of 0.52%. Meanwhile, Capital One's 12-month return on average assets was 1.77%, according to SNL. Even with the further dilution from the HSBC card deal, Capital One looks like a winner for long-term investors with any confidence in the U.S. economy. The card business is far more profitable than the more diversified but slow-growing -- or shrinking -- loan businesses of the largest U.S. banks. The deal also fits in quite well with the ING Direct deal, and dilution concerns are mitigated by the stock's historically low valuation. -- Written by Philip van Doorn in Jupiter, Fla. To contact the writer, click here: Philip van Doorn. To follow the writer on Twitter, go to http://twitter.com/PhilipvanDoorn.