Capital One Faces $4.75 EPS Test as It Defends $35 Billion Discover Deal

3 articles · Updated · CNBC · Jul 20

$4.75 in EPS on $15.77 billion of revenue is the Street's target for Capital One's Tuesday Q2 report, a release investors will use to judge whether the Discover acquisition is starting to pay off.
$1.8 billion in integration costs since the deal closed last May has helped drive two straight profit misses, raising pressure on CEO Richard Fairbank to show how that spending leads to earnings growth.
By 2027, Capital One still says it can deliver more than 15% EPS accretion and $2.7 billion in annual synergies, helped by shifting cards onto Discover's network to reduce Visa and Mastercard processing fees.
Shares have rebounded 20% from a June low near $174 but remain down 14% this year, with investors still wary of reserve builds, subprime exposure and a consumer backdrop strained by inflation and higher oil prices.