Capital One Financial Corporation (COF.N): 2Q26 Review - Expenses Cloud an Otherwise Strong Revenue and Credit Picture

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Capital One Financial Corporation (COF.N): 2Q26 Review - Expenses Cloud an Otherwise Strong Revenue and Credit Picture

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27 Jul 2026 05:00:00 ET │ 15 pages

Capital One Financial Corporation (COF.N)

2Q26 Review - Expenses Cloud an Otherwise Strong Revenue and

Credit Picture

CITI'S TAKE Buy

Price (24 Jul 26 16:00) US$202.84 COF underperformed the day following earnings (down ~2.4% vs BKX up

Target price US$295.00↓ ~0.3%), as 2Q results were better-than-expected generally for everything

other than expenses (~43c headwind to cons), which outweighed ~2c of from US$310.00

revenue upside. Mgmt call commentary didn't do much to firm up the Expected share price return 45.4%

expense outlook, which the market has been looking for guidance on, and Expected dividend yield 1.6%

likely weighed on the stock. Credit was exceptionally better, and the Expected total return 47.0%

~$650 mil reserve release in 2Q largely drives our '26 estimates higher. We Market Cap US$124,442M

model in stronger revenue growth, mostly in interchange fees, offset by an

elevated expense base. All together, 2Q results likely imply upward

revisions to cons ($4.73 2Q EPS ~21% higher than cons $3.90), which is

also why we think the market continues to be focused on expenses. Trim Benjamin GerlingerAC

PT to $295 on a higher assumed cost-of-equity, but still see this as one of +1-212-816-3538

the most attractive stocks in our universe longer-term. benjamin.gerlinger@citi.com

Mikhail Mrotchek

Estimate Changes — Our 2026E EPS increases 60c to $16.90 (vs. Visible Alpha +1-212-816-2345

consensus of $16.34), 2027E EPS increases 30c to $21.80 (vs. Visible Alpha misha.mrotchek@citi.com

consensus of $20.79), and 2028E EPS decreases $1.25 to $26.40. See Figure 1 for

Kaili Wang, CFAmore detail on estimate revisions.