Capital One Stock Pops. Its Earnings Got a Buyback Boost.

The Capital One board authorized the repurchase of up to $16 billion of common stock. (Johannes Eisele/AFP via Getty Images)

Key Points

• Capital One Financial’s third-quarter adjusted earnings of $5.95 per share and revenue of $15.4 billion exceeded analyst estimates.
• The bank’s net interest margin increased to 8.36% from 7.11% year over year, and its board authorized up to $16 billion in stock buybacks.
• Capital One stock rose 3.2% on Wednesday, bringing its year-to-date gain to 26%, outpacing the Financial Select Sector SPDR ETF’s 10% rise.

Shares of Capital One Financial rose Wednesday after the bank breezed past quarterly earnings expectations and announced up to $16 billion in stock buybacks.

Capital One posted adjusted earnings of $5.95 a share for the third quarter, above analysts’ consensus estimate of $4.49. Revenue totaled $15.4 billion, surpassing Wall Street’s call for $15.1 billion. The bank’s net interest margin—the spread between interest income and expenses—climbed to 8.36% from 7.11% the year prior.

The board also authorized the repurchase of up to $16 billion of common stock, the company announced. It didn’t provide a specific timeline for the buybacks.

Capital One stock climbed 3.2% on Wednesday. Shares are now up 26% this year, well ahead of the Financial Select Sector SPDR exchange-traded fund, which has risen 10%.

The print provides a solid foundation for the McLean, Va.-based bank as it integrates Discover Financial Services, which it acquired in a $35.3 billion all-stock deal earlier this year.

Capital One expects integration expenses will trend higher than its original estimates. It also noted plans to tighten credit on certain Discover credit-card programs, which will limit growth. However, the company reiterated that the deal is anticipated to deliver $2.5 billion in combined synergies.

“Overall, the results were encouraging, particularly in relation to the share repurchase announcement and reiteration of synergy targets,” wrote Seaport Research Partners analyst Bill Ryan, who reiterated a Neutral rating for Capital One stock.

Write to Nate Wolf at nate.wolf@barrons.com