Why Capital One Financial (COF) Stock Is Rising In After-Market Trading

NEW YORK (TheStreet) -- Capital One Financial Corp.  (COF) shares are climbing 0.6% to $75.60 in after-market trading on Wednesday.

The climb follows the financial service company's release of its 2014 first quarter earnings report. 

The company posted first quarter net income of $1.2 billion, or $1.96 earnings per dilluted share, a 41% increase from the fourth quarter 2013 posted net income of $852 million and $1.43 EPS.

The company has an earnings call scheduled for 5:00 pm EST today to discuss the results.

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TheStreet Ratings team rates CAPITAL ONE FINANCIAL CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate CAPITAL ONE FINANCIAL CORP (COF) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 32.83% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, COF should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The debt-to-equity ratio is somewhat low, currently at 0.97, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
  • COF, with its decline in revenue, slightly underperformed the industry average of 4.5%. Since the same quarter one year prior, revenues slightly dropped by 4.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • CAPITAL ONE FINANCIAL CORP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, CAPITAL ONE FINANCIAL CORP increased its bottom line by earning $7.35 versus $6.70 in the prior year. For the next year, the market is expecting a contraction of 6.9% in earnings ($6.85 versus $7.35).
  • You can view the full analysis from the report here: COF Ratings Report
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