Is Capital One Financial a Buy?

Capital One Financial (NYSE: COF) is one of the largest banks in the country in terms of assets, with about $363 billion under management as of the end of 2020. While it does have branches, primarily throughout the mid-Atlantic region, it is best known as a credit card issuer. As such, it makes most of its revenue -- about 60% -- from lending money for credit card purchases, generating revenue from interest and swipe fees.

Capital One is the fifth-largest credit card issuer in the U.S., with a market share of roughly 10.5%. It has approximately 62 million credit cardholders. With credit cards making up the bulk of its business, Capital One was hit harder than most banks by the pandemic, but it is also positioned to come back stronger in 2021. Is it a stock you should consider buying?

Capital One got saddled with net losses in the first two quarters of 2020, as the pandemic and the resulting shutdowns curbed consumer spending and led the company to set aside billions for potential credit losses due to financial hardships. But as the lockdowns lifted and stimulus checks and other forms of relief were issued, consumer spending slowly increased and the risk of credit losses declined.

Continue reading

Source Fool.com