Will Capital One Stock Beat Upcoming Earnings?

Forbes

6 days ago

Photo illustration byCapital One Financial (NYSE:COF) is scheduled to announce its Q2 2025 results on Tuesday, July 22, representing its first earnings report since finalizing the significant acquisition of Discover in May. This all-stock agreement established the largest U.S. credit card issuer by outstanding balances and has positioned Capital One as a vertically integrated payments giant with its own network. Although the effects of the merger may not be immediately reflected in this quarter's results, we will be attentive to any updates regarding integration progress, realization of synergies, and direction of strategy.
The company has projected approximately $2.7 billion in annual synergies by 2027. Revenue for the quarter is expected to be around $12.7 billion according to consensus estimates, with earnings anticipated to be $3.56 per share. This projection is supported by increased net interest income from higher card balances as well as escalating interchange fees. We will also be looking for updates on the company's outlook. While the credit card sector has performed well in the post-pandemic landscape, recent tariffs enacted by President Donald Trump are impacting global trade and may affect consumer spending and travel.
The company holds a current market capitalization of $140 billion. Revenue over the past twelve months (before the Discover acquisition) was $40 billion, resulting in a net income of $4.9 billion. The outcome will largely depend on how the results compare to consensus expectations; however, understanding historical trends can tip the odds in your favor if you are an event-driven trader.
There are two approaches to achieve this: either grasp the historical trends and position yourself ahead of the earnings announcement, or analyze the correlation between immediate and medium-term returns after earnings and adjust your position accordingly post-release. With that in mind, if you are looking for upside with less volatility than that of individual stocks, the Trefis High Quality portfolio offers an alternative – it has outperformed the S&P 500 and generated returns exceeding 91% since its inception.
See earnings reaction history of all stocks
Capital One Financial's Historical Odds of a Positive Post-Earnings Return
Here are some observations regarding one-day (1D) post-earnings returns:
Further information on 5-Day (5D), and 21-Day (21D) returns post earnings is summarized along with the statistics in the table below.
5-Day (5D), and 21-Day (21D) returns post earnings
Correlation Between 1D, 5D, and 21D Historical Returns
A relatively lower-risk strategy (although not effective if the correlation is minimal) is to understand the correlation between short-term and medium-term returns following earnings, identify the pair that has the strongest correlation, and carry out the appropriate trade. For instance, if 1D and 5D demonstrate the highest correlation, a trader can position themselves 'long' for the subsequent 5 days if the 1D post-earnings return is positive. Here is some correlation data based on both 5-year and 3-year (more recent) histories. Please note that the correlation 1D_5D refers to the relationship between 1D post-earnings returns and subsequent 5D returns.
Correlation Between 1D, 5D, and 21D Historical Returns
Learn more about Trefis RV strategy that has outperformed its all-cap stocks benchmark (a combination of all three: the S&P 500, S&P mid-cap, and Russell 2000), generating strong returns for investors. Separately, if you seek upside with a steadier ride than an individual stock like Capital One Financial, consider the High Quality portfolio, which has outperformed the S&P and achieved returns exceeding 91% since its inception.
Invest with Trefis Market-Beating Portfolios
See all Trefis Price Estimates