Join        Login             Stock Quote

Capital One - Bull Numbers Analysis

 April 11, 2008 10:37 AM

Thursday April 10, an article posted by Morningstar's Ganesh Rathnam discussed some wonderful ways to profit from selling PUT options against the shares of Capital One (COF) as the author believes that the market has it wrong. Remember, the analyst is suggesting a bullish strategy.

Here are the highlights of the analyst's report and a few comments:

We believe these fears are overblown. Capital One, in our opinion, has all the tools to fight these fires. Ever get notices from your credit card company warning you of a stiff impending rate hike? Well, there's Capital One's first tool: its ability to reprice loans almost at will to meet higher credit costs. It can also raise fees and change the minimum required payments on cards so that consumers must pay off their loans faster.

[Related -Five Uptrending Stocks At New 52 Week Highs To Start July]

So, Mr. Rathnam, Capital One should just abuse their current customers and demand that they pay for the problems associated with the remainder of the company. Wow, I do not want to be your client! Also, have you noticed that there is pending legislation to stop these types of egregious practices? And one more thing…. kindly see this little item about COF capping fees for cardholder. Maybe you missed this piece that discusses how Capital One is freezing the variable rates on some card and converting them to fixed.

[Related -It's CEO-Letter Time]

After the acquisition of two banks, North Fork and Hibernia, only 44% of the company's managed loan portfolio consists of credit card receivables, compared with nearly 100% a few years ago. Additionally, Capital One has a history of writing high-quality loans and managing credit risk. In fact, net charge-offs have trended lower in each of the past four years, declining to 2.88% of managed loans in 2007 from 5.86% in 2003

Charge-offs trending lower? What information are you looking at? The latest report released yesterday shows a 13% increase in charge-offs since December, 2007. Moreover, you should know this: Charge-offs decline during economic expansions. We are in a totally different market condition now. Also, write-offs PEAK just prior to an economic recovery. The latest 8-K reports charge-offs are 4.11% for managed and 5.46% for national lending.

Next Page >>12


Comments Closed

rss feed

Latest Stories

article imageWorld Growth: Mediocre or Pathetic?

The recent disappointing performance of the world economy has been labelled as the "new mediocre" by read on...

article imageSurvey Data For US Services Sector Hint At Mild Q2 Rebound

Yesterday’s discouraging numbers on job growth in April via the ADP Employment Report raise doubts about a read on...

article imageADP: US Job Growth Stumbled In April

Employment growth at US companies slowed in April to the weakest gain in three years, according to this read on...

article imageBogle Says Indexing Destined To Win The Battle Of The Quants

Vanguard founder John Bogle gave a powerful speech last month at the Q Group’s Spring Seminar that lays out read on...

Popular Articles

Daily Sector Scan
Partner Center

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.