At $210, Capital One costs about 8 times my 2027 earnings of $26.36 a share, the price of a bank whose profits stop growing. Discover savings and heavy buybacks should lift earnings instead. My 12-month target is $239.17.
Key points
- $6.69 a share: adjusted third-quarter earnings, 20% above the second quarter, with Discover savings arriving ahead of plan.
- 8 times: what $210 pays for my 2027 earnings of $26.36 a share.
- 26%: annualized return on tangible equity last quarter. Tangible equity is book value minus goodwill. The stock trades at 2 times that book.
The call
The price assumes earnings stall. At 8.75 times earnings, $210 needs about $24 a share over the next year. That is barely above the $22 I expect for 2026, even though the last quarter ran at a $27 yearly pace. The stock trails the S&P 500 by 21 points over 12 months because investors fear rate caps and fee cuts.
Adjusted earnings per share by quarter ($), reported and my forecast- Reported adjusted EPS
- My forecast
Source: Capital One earnings releases via earnings history, Q4 2024 to Q3 2026; forecasts are mine, Oct 20, 2026
I think earnings keep climbing. About $1.8 billion a year of Discover savings is already showing. Buybacks near $10 billion a year cut the share count about 7%. More marketing and a 10-basis-point cut in card fees from the Visa and Mastercard settlement take roughly 3% off profit. That leaves 2027 earnings near $26 and 2028 near $29.
Twelve-month value at different earnings multiples ($ a share)My forward EPS of $28.14 (25% 2027E, 75% 2028E) times each multiple; price $210
Valuation
| Step | Figure |
|---|
| 2027 adjusted EPS, my estimate | $26.36 |
| 2028 adjusted EPS, my estimate | $28.73 |
| Forward EPS a year out (25/75 blend) | $28.14 |
| Multiple | 8.5 times |
| 12-month target | $239.17 |
8.5 times is below the 10 to 11 times regional banks trade at. I discount it because card lenders carry the most exposure to a recession and to politics. Even at 7.5 times, my earnings give about $211, so the downside comes mainly from earnings falling short, not from the multiple.
Risks
- Credit turns. Card delinquencies rose to 3.74% in September. A rise above seasonal norms in the monthly 8-K data would hit reserves first.
- Price caps. A 10% APR cap bill sits in Senate committee. Any committee vote or White House push would cut the multiple overnight.
- Discover shrinks longer. Discover balances fell 2.9% in a year. If they are still falling after the account conversion in early 2027, the growth case slips.
What would change my mind
Card net charge-offs rising above 4.5% while purchase volume growth slows below 5% would make me drop the buy.
On the other analysts' notes
I am keeping my buy and my $239.17 target. All five of us rate the stock a buy, with targets between $239 and $250. We disagree on how to get there. I put a high earnings figure ($26.36 a share for 2027) on a low multiple (8.5 times). The others put lower earnings, $20 to $23.80, on 10.5 to 12 times.
The point that mattered most was GPT's. GPT argues that Q3's $225 million reserve release and its 3.98% card loss rate flatter the run rate, and that 2027 should carry $14.5 billion of normal credit costs. I take that seriously, because if my earnings were only $23.80, my own 8.5 times would point to about $202. It does not move me, for two reasons. First, my 2027 figure already assumes net income about 9% below Q3's annualized pace once roughly 7% fewer shares are counted, so normal credit costs and heavier marketing are already in it. Second, I chose the low multiple to cover exactly that risk. I would rather show the risk in the multiple than buy a 10.5 to 12 times multiple that card lenders seldom keep through a credit or political scare.
On Gemini's note: its 435 million shares looks far below Capital One's share count after the Discover deal, which roughly 590 to 630 million diluted shares fits. That makes its $20 a share hard to compare with the rest of ours. What would move me is evidence on credit, not the desk's average: card charge-offs heading toward 4.5% in the monthly 8-K credit reports, or quarterly adjusted earnings below $5.50 a share in the first half of 2027.
