Highlights

  • Capital One shows 626.99% basic EPS growth, a P/E of 12.36 and PEG of -14.40.
  • Third quarter net income was $3.5 billion, or $5.61 per diluted share.
  • Net interest margin was 8.41 percent; common equity Tier 1 capital ratio was 13.8%.
  • Common shares outstanding were 601.5 million, against 635.7 million a year earlier.

An undervalued growth stock pairs earnings growth with its P/E and PEG ratios, and Capital One (NYSE:COF) shows all three: basic earnings per share grew 626.99% over one year, the trailing twelve-month P/E ratio is 12.36 and the PEG ratio, on an expected basis, is -14.40, with shares trading at USD 204.60 on October 28, 2026, up 0.57%. On the company's side, the bank holding company completed its acquisition of Brex on April 7, 2026, and on October 20 reported third quarter 2026 net income of $3.5 billion, or $5.61 per diluted common share, with a common equity Tier 1 capital ratio of 13.8% at September 30.

Capital One Financial Corporation is headquartered in McLean, Virginia, and is incorporated in Delaware. It describes itself as a technology-based financial services company that operates as a global payments provider and diversified financial institution. Its lines of business are Credit Card, Consumer Banking, which includes its Global Payment Network, and Commercial Banking, with primary markets in the United States, Canada and the United Kingdom. At September 30, 2026, it had $480.7 billion in deposits and $672.9 billion in total assets.

Growth: Third Quarter Earnings, Revenue and Net Interest Margin

Net income was $3.5 billion in the third quarter, against $3.0 billion, or $4.73 per diluted share, in the second quarter of 2026 and $3.2 billion, or $4.83 per diluted share, in the third quarter of 2025. Net income per basic common share was $5.62 against $4.83 a year earlier. For the nine months, net income was $8,733 million against $319 million, and basic earnings per share were $13.67 against $0.23. Adjusted net income, a non-GAAP measure, was $6.69 per diluted share.

Total net revenue was $16,344 million against $15,359 million a year earlier, and the company said it increased 3 percent from the second quarter. Net interest margin was 8.41 percent, up 40 basis points from the second quarter. Non-interest expense was $8,856 million, and the efficiency ratio was 54.19 percent. Period-end loans held for investment were $462.5 billion.

Valuation: P/E of 12.36, PEG of -14.40 and Returns

The P/E ratio of 12.36 is measured on trailing twelve-month earnings, and the PEG ratio of -14.40 on an expected basis. Return on average assets was 2.09 percent against 1.94 percent a year earlier, and return on average common equity was 12.62 percent against 11.50 percent. Tangible book value per common share, a non-GAAP measure, was $102.72 against $105.18.

Chief Executive Officer Richard Fairbank said in the release that the Discover integration continues to go well. On the call, he said management's current view is that the remaining synergies and the Visa and Mastercard settlement are roughly offsetting in magnitude, and that run rate earnings power is consistent with expectations at the time the Discover deal was announced.

Capital Ratios, Dividends and Funding

The common equity Tier 1 capital ratio under the Basel III Standardized Approach was 13.8% at September 30, 2026, against 14.4% a year earlier, and the Tier 1 capital ratio was 14.6%. The Tier 1 leverage ratio was 11.9%. The company noted that regulatory capital metrics are preliminary.

Dividends declared and paid were $0.80 per common share in the quarter, against $0.60 a year earlier, and $2.40 for the nine months, against $1.80. Common shares outstanding fell to 601.5 million from 613.5 million at the end of the second quarter. Borrowings were $49,774 million and total stockholders' equity was $109,656 million.

Disclosed Risks and Outlook

Provision for credit losses was $2,916 million, which included net charge-offs of $3.1 billion and a $225 million loan reserve release. The net charge-off rate was 2.73 percent against 3.16 percent. The 30+ day delinquency rate was 3.41 percent against 3.50 percent a year earlier and 3.13 percent in the second quarter. The allowance for credit losses was $22,739 million, a coverage ratio of 4.92 percent. On the call, the chief financial officer said the card allowance release was partly offset by greater consideration of adverse economic scenarios related to geopolitical risks.

Discover integration expenses were $338 million pre-tax and Brex integration expenses were $47 million. Management said legacy Discover card loans shrank about 3% from the prior year during a temporary slowdown in Discover loan growth, and expects continued contraction over the next several quarters before loan growth turns positive.

Management said it expects a negative effect on run rate earnings from lost interchange revenue if the revised Visa and Mastercard merchant settlement is approved, with a final approval hearing in November. The company also said it expects to increase marketing spending in the fourth quarter and into 2027.