An analyst for KBW Inc.'s Keefe, Bruyette & Woods Inc. raised his second-quarter earnings estimate for Capital One Financial Corp. by 8 cents, to $1.25 a share, saying credit losses have been lower than he expected.
Capital One filed its monthly managed credit data for the month of June on Tuesday. In a note to investors that day, KBW's Robert Hughes wrote that "there were few surprises in the monthly data" and that managed losses across the U.S. card, automotive, and international segments "were about $40 million below our projection for the quarter."
As a result, KBW's previous estimate of Capital One's second-quarter earnings "could be a bit light," he concluded.
The main reason for the lower losses was "better-than-expected results" from Capital One's automotive loan segment this quarter, with a chargeoff rate that "totaled 3.84%, well below our prior projection of 4.80%," he wrote. Quarterly chargeoff rates in the U.S. card portfolio were "generally in line with both our projection for the quarter as well as management's projection at 6.26%," while the international loan segment's chargeoffs were "worse than expected" at "6.07% versus our projection of 5.45%."
But the monthly data did not sway another analyst, Scott Valentin of Friedman, Billings, Ramsey & Co., who reiterated his "underperform" rating Wednesday.
The data showed "continued credit deterioration" and "there is no positive catalyst for credit quality in the near future to drive share price appreciation," Mr. Valentin said in a note to investors.
He wrote that he would adjust his yearly earnings estimates and price target for Capital One after it reports its quarterly earnings. It was slated to report after today's market close.