Capital One (COF) Up 9.6% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Capital One (COF). Shares have added about 9.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Capital One due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important drivers.

Capital One's Q2 Earnings Beat on Higher Revenues, Lower Provisions

Capital One’s second-quarter 2026 adjusted earnings of $5.81 per share significantly outpaced the Zacks Consensus Estimate of $4.85. The bottom line was up from $5.48 in the prior-year quarter. 

Results benefited from a rise in NII and non-interest income, along with a substantial decline in provisions. Loan growth and improvement in NIM were other positives. However, higher expenses and a sequential decline in deposits were undermining factors. 

Results excluded acquisition-related amortization expenses and Discover Financial and Brex integration costs. Including these, net income available to common stockholders (GAAP basis) was $2.94 billion or $4.73 per share against a net loss available to common stockholders of $4.34 billion or $8.58 per share in the prior-year quarter.

Revenues Increase, Expenses Rise

Total net revenues were $15.85 billion, rising 27% year over year. Also, the top line beat the Zacks Consensus Estimate of $15.7 billion. 

NII was $12.37 billion, up 24% from the prior-year quarter. NIM expanded 39 basis points (bps) to 8.01%.

Non-interest income was $3.48 billion, jumping 39%. This was driven by higher net discount and interchange fees, service charges and other customer-related fees and other income.

Non-interest expense was $9.04 billion, up 29%. The increase reflected a rise in salaries and associate benefits, occupancy and equipment costs, marketing expenses, communications and data-processing costs, amortization of intangibles and other expenses. 

The efficiency ratio was 57.05%, falling from 55.96% in the prior-year quarter. A rise in the efficiency ratio indicates lower profitability.

As of June 30, 2026, loans held for investment were $457.17 billion, up 2% from the prior quarter. Total deposits were $484.26 billion, down 1% sequentially.

Credit Quality Improves

Provision for credit losses was $2.99 billion, down 74% year over year. The allowance for credit losses, as a percentage of loans held for investment, was 5.02%, down 41 bps.

The 30-plus-day performing delinquency rate was 2.91%, down 22 bps year over year. The 30-plus-day delinquency rate was 3.13%, down 19 bps. The quarter included a $662-million loan reserve release, primarily driven by favorable credit performance in Domestic Card. 

On the other hand, net charge-offs (NCOs) were $3.64 billion, rising 19% year over year.

Capital Ratios Decline

As of June 30, 2026, the common equity Tier 1 capital ratio was 13.7%, down from 14% in the prior-year quarter. The Tier 1 capital ratio was 14.8%, down from 15.1% a year ago.

Share Repurchase Update

During the reported quarter, Capital One repurchased 14 million shares for $2.7 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

Currently, Capital One has a average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a score of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Capital One has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."

Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention. 

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research