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Capital One Q4 results fails to impress the street

Shares of the credit card issuer Capital One Financial Corporation (NYSE: COF) was down more than 4% after the bell as the firm’s fourth quarter results failed to beat analyst estimates. The company’s earnings were impacted by flat fourth quarter revenues coupled with margin compression and increased expenses.

Fourth quarter profits came in at $1.26 billion compared to a loss of $971 million due to increased tax provisions last year. The bank’s top line of $7.01 billion was flat with prior year period and fell short of $7.08 billion expected by the street. On an adjusted basis, earnings were $1.87 per share compared to $1.62 per share reported last year. But quarterly EPS was much below than the $2.38 forecasted by the analysts.

On the revenue front, net interest income rose modestly to $5.82 billion, while non-interest income was down about 0.5% to $1.19 billion due to drop in service fees and unrealized losses offset by 4% improvement in interchange fees.

Net interest margin (NIM), one of the key metrics tracked by the street, was down 5 basis points to 6.96% compared to last year. Provision for bad loans decreased 15% over the prior year period but has jumped 29% sequentially which remains a concern for investors about the credit quality.

Capital One Financial posts upbeat Q3 results

Credit card division grew 2% to $4.5 billion while consumer and commercial segment saw its top line jump 41% and 35% respectively.

Marketing expense came in at $831 million, witnessing 80% jump compared to last year and operating expense decreased modestly to $3.3 billion.

On the asset quality side, the charge-off ratio decreased 22 basis points to 2.67% compared to 2.89% reported last year. Non-performing assets (NPA), another vital metric of interest to analysts, was 0.35%, down six basis points compared to 0.41% reported in the prior year period.

The company’s stock is down over 21% over the last 12 months and it has increased 10% in 2019.

American Airlines earnings preview: Costs and domestic travel to decide Q4 results

American Airlines Group (AAL) is slated to report its fourth quarter 2018 earnings on Thursday before the market opens. Analysts expect the world’s largest airlines to earn $1.04 a share on revenue of $10.98 billion for the final quarter of 2018.

It’s been a month since the start of the US government shutdown. This has led the reduction in the domestic travel and bad weather adds worries to the already troubled airline companies. The increasing fuel costs have been the major headwind for airlines industry in 2018. The political uncertainty and fuel costs would play a vital role in American Airlines’ Q1 outlook.

American Airlines Group Q3 2018 Earnings Infograph

American Airlines third quarter 2018 Earnings Infographic

For the third quarter ended September 31, 2018, the Fort Worth, Texas-based airlines reported a fall of 49% in profit and a 5% increase in total operating revenues. While the company surpassed Street’s earnings estimates, it fell short of revenue predictions.

On January 10, American Airlines lowered its FY18 EPS outlook to a range of $4.40 to $5.00 from an earlier range of $4.50 to $5.00. Citing a lower than anticipated improvement in the domestic market, the company also reduced its revenue outlook for the fourth quarter. The current total revenue per available seat mile (TRASM) for Q4 is expected to grow about 1.5% year-over-year, at the lower end of the previously guided growth range of 1.5-3.5%.

Related: American Airlines Q3 earnings conference call transcript

Last week, United Airlines and Delta Air Lines reported their Q4 results. United beat Street’s views for the quarter, while Delta surpassed profit expectations, but missed on revenue predictions. On Thursday, Southwest Airlines (LUV) and JetBlue (JBLU) will also be reporting their quarterly results.

AAL stock ended Tuesday’s regular trading session at $32.74, down 3.62%. The stock, which plunged to a yearly low ($28.81) on January 3, has given a negative return of 44% in the past 52 weeks.

 

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