QS Research · Michael Burry's Scion Capital analyst template · 2006
CAPITAL ONE FINANCIAL CORP (COF)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction medium · base case +0% · downside -27% · upside +53%
At 11.6x TTM P/E and 1.11x book on a 9.6% ROE, COF is priced as a large bank, not as a card-and-network franchise. The GAAP number is depressed by Q3 2026 acquisition amortization and integration costs: adjusted EPS was $6.69 versus GAAP $5.61, and $1.8B of annualized Discover synergies are ahead of schedule. But the base case at today's 11.6x on $10.50B TTM net income to common is essentially today's price, while the +53% upside requires an AXP-like 17.7x re-rating not supported by a 9.6% ROE. The -27.4% downside at Ally's 8.4x is live if credit or expenses worsen, so this is a watch until the base case itself clears +30% or the market pays for adjusted earnings.
Key numbers
- Share price: $201.87
- Market cap: $121.43B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $63.01B
- P/E (TTM): 11.6x
- Price / book: 1.11x
The 15 boxes
- ✓ 1. Long-form business notes
COF's source-supported business is a bank holding company with a Bank and broker-dealer subsidiaries and credit-card and auto lending that includes subprime accounts; the parent relies on subsidiary dividends for dividends, buybacks and debt payments. The oldest FY2020 10-K records COVID-era buyback suspension and dividend cut/restoration, while the latest 10-K highlights the Discover acquisition, integration and Category III-to-II regulatory thresholds. XBRL facts show the Revenue row rising from $3.74B FY2020 to $8.06B FY2025, net income to common of $2.18B in FY2025 versus $2.38B in FY2020, and total equity up from $60.20B to $113.62B.
- ✓ 2. Competitive advantage
Capital One's own 10-K describes a business with no pricing shelter: it competes in every segment against bank and non-bank providers, and cards are sold largely on price, credit limit and rewards. The one genuinely scarce asset is the newly acquired network (Global Payment Network/Discover/PULSE), and its durability is unproven — the FY2025 10-K's own risk-factor diff adds licensee-base, merchant-acceptance and network-participant-default risks. The return record is poor and worsening on the reported numbers: net income to common fell from $4.45B (FY2024) to $2.18B (FY2025) even as revenue rose from $5.92B to $8.06B, and total equity nearly doubled to $113.62B, so return on year-end common equity drops to about 1.9% in FY2025 from 7.3% in FY2024.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended September 30, 2026) was a growth quarter with clean credit: total net revenue $16.3 billion (+6% YoY), net income $3.5 billion ($5.61 diluted EPS), net interest margin 8.41% (+5 bps), net charge-off rate 2.73% (-43 bps) and a $225 million loan reserve release. GAAP EPS of $5.61 sits well below adjusted EPS of $6.69 because of acquisition amortization ($0.60), Discover integration ($0.42) and Brex integration ($0.06) items. Capital return continued ($2.6 billion of buybacks in Q3 2026, $7.9 billion in the first nine months) with CET1 at 13.8%, down from 14.3% at December 31, 2025. Neither the 10-Q nor the same-quarter earnings release gives numeric guidance; outlook language is qualitative only.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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