COF: Deep Dive—Franchise Scarcity Value Grows, at a Cost

研报英文原文证据摘录

COF: Deep Dive—Franchise Scarcity Value Grows, at a Cost

Equity Research

Earnings Revised — May 20, 2026

Consumer Finance

Capital One Financial Corporation

Deep Dive—Franchise Scarcity Value Grows, at a Cost Overweight

Price Target: $260.00

Notable Changes

Our Call $ (Dec) Current Prior % Chg

We provide a Deep Dive on Capital One's global payment network build-out, expense/ EPS 2026 19.85 20.15 -1.5%

ROTCE scenarios and recent Brex deal. While expensive, COF's efforts are creating more Rev. (MM) 2026 63.80B 63.78B 0.0%

scarcity value for this tech/AI driven franchise. Reiterate Overweight rating. Rev. (MM) 2027 67.67B 67.62B 0.1%

The ROTCE Debate. While the company has confirmed that returns are on-track with Ticker COF

initial Discover deal projections, investors are debating a wide range of ROTCE (19-25%). Upside/(Downside) to Target 42.8%

And every +/- 1 point in ROTCE = $1+ in EPS. Our model assumes a 21% ROTCE in '27 Price (05/19/2026) $182.03

and 22% in '28. Combining Capital One + Discover implies ~19%, then we layer in ~3pts

52 Week Range $174.98 - 259.64

of synergies. Keep in mind, '28 has the full year of synergies. And '27 will benefit from the

Discover brown-out reversal and improving eff ratio. Market Cap (MM) $113,478

Enterprise Value (MM) $146,766

You Get What You Pay For. Expenses are the main investor push back, and the lack of Average Daily Value (MM) $894

guidance specifics has contributed to negative earnings revisions. We see the efficiency Dividend Yield 1.8%

ratio peaking in Q2, then moderating through YE26 as tech conversions support Discover

operating expense synergies. With their tech stack and a network, the company sees $ (Dec) Q1 Q2 Q3 Q4 FY

significant investment opportunities. We believe the negative sentiment around expenses EPS