Altruistica

"Altruistica": Seeking a return to full financial disclosure and regulatory oversight. A financial market analysis blog for "entertainment purposes" only by an experienced CFA seeking new hedge fund engagements for investment writing and analysis. The author has experience investing internationally, running a hedge fund, making angel investments, and helping launch five startup companies. Investors should do their own due diligence.

18 January 2007

Capital One Financial (COF) Big Miss...Lowered Guidance

Capital One-COF reports Q4 EPS $1.14 vs. consensus est of $1.24
COF sees 2007 EPS $7.40-$7.80 vs. consensus est of $8.11, which includes $430M of costs and charges. The company plans on buying back $2.25B worth of shares starting in Q2. So what will support the shares in the near term??? When you listen to the call, the quarter would have been a lot worse without the 42% gain Y-Y in the credit card business to $337m. Of course, the loan charge-off and allowance for future losses soared, but no wire service carried these negative details.

Capital One quarterly results, 2007 forecast, miss analyst estimates; North Fork benefits delayed
COF75.82, -0.71, -0.9% ) said. The company said it expects to make between $7.40 and $7.80 a share in 2007. Analysts were expecting fourth-quarter profit of $1.24 a share and 2007 earnings of $8.11 a share on average, according to a Thomson First Call survey. Capital One said it's still targeting $275 million of pre-tax synergies from its North Fork acquisition, but said most of these savings will be realized late in 2008 because of the "challenging" interest rate environment and the time it will take to convert to a single deposit platform and brand.

Downsizing is complete from the North Fork and Hibernia acquisitions with $8.5B in loans sold off in 2006, half out of COF and $1.5B of legacy housing loans from Hibernia and $4B of residential whole loans out of North Fork plus $5.5B of short-term residential housing securities. What a mess !!

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