Capital One Financial (COF, Financial) and Discover Financial Services (DFS) stocks experienced notable movement today following the regulatory approval for their planned merger. Discover shares surged significantly while Capital One saw a price increase of 1.96% to $164.73. This merger announcement also coincided with Visa (V) and MasterCard (MA) shares trading down around 3%.
The merger approval by the Office of the Comptroller of the Currency comes with stipulations, requiring Discover to comply with a consent order and settle fines related to past overcharging incidents. This merger will result in the creation of the eighth-largest U.S. depository institution with approximately $640 billion in consolidated assets, with closure anticipated by the end of May.
Analyzing the stock performance of Capital One Financial (COF, Financial), it currently trades at $164.73. The stock is featured in the 'Large Value' style box and holds a 'B' grade for growth. Capital One displays a predictability rank of 4.5 out of 5, suggesting a reliable pattern in revenue and earnings growth, despite a recent 14.49% drop in its 12-week price change.
In terms of valuation, Capital One Financial holds a PE ratio of 14.21, close to the industry median of 13.54. The GF Value assessment categorizes COF as 'Modestly Overvalued,' with a GF Value estimate of $146.48, suggesting some potential risk of overpayment at the current price level. For more detailed valuation metrics, you can visit the GF Value page.
On financial metrics, the company stands strong with a price-to-book ratio of 1.03, indicating a fair valuation relative to its book value. Capital One's debt level appears manageable, despite having issued $4.2 billion in new debt over the past three years. The company's Beneish M-Score of -2.55 indicates that it is unlikely to be a manipulator of financial information.
Market watchers should note that Capital One's stock exhibits a dividend yield of 1.44%, with a healthy FCF margin of 43.35%, showcasing its capacity to generate surplus cash. The stock's 1.36% increase in price over the past week further emphasizes investor optimism in light of the merger announcement.
