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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: MythMan who wrote (240192)	5/12/2003 11:34:52 AM
From: Lucretius	Respond to of 436258

they're being visited everywhere

To: MythMan who wrote (240192)	5/12/2003 11:39:58 AM
From: zonder	Respond to of 436258

JPMorgan just put out an "Overweight" report on COF this morning: Capital One Financial April Credit Recap; In-line With Expectations Capital One Financial Overweight Ticker COF Price(05/09/03) $44.91 52-Wk.Range $24.05-64.93 Mkt.Cap(BN) $10.13 Fiscal Year Dec Shares O/S(MM) 226.30 EPS 2001A 2002A 2003E 2004E 1Q (Mar) $0.66 $0.83 $1.35A 2Q (Jun) $0.70 $0.92 $1.13 3Q (Sep) $0.75 $1.13 $0.98 4Q (Dec) $0.80 $1.05 $1.09 FY $2.91 $3.93 $4.55 $5.25 P/E FY 15.4 11.4 9.9 8.6 Capital One released April credit results this morning (5/12) and the data was in-line with our expectations. For the first time, credit statistics were provided on a managed basis, which should mitigate noise that historically emanated from extrapolating on master trust trends. • Managed basis credit losses in April were 6.36%, 11 bps below 1Q03 levels and inline with our full 2Q03 estimate of 6.35%. Delinquency improved 13 bps m/m to 4.86% ($26 million, 1%, on a $ basis) and continues to support our expectations for improving credit trends in the remainder of 2003. • As expected (see our 5/7 preview), credit losses in the master trust rose m/m (22 bps to 5.29%). Part of the linked month increase was driven a 4% m/m drop in recoveries, which was in-line with the average 3.6% decline seen in the past 2 years. • Managed loans of $60 bn ended April just $200 million shy of our full 2Q03 expectations. • Our sensitivity analysis suggests that every 10 bp differential to our quarterly loss estimate equates to about $0.04 per share, all else being equal. • COF currently anticipates losses to decline (from a 1Q "peak" of 6.47%) in the remainder of 2003, the main driver being the seasoning of the subprime growth put on late 2001/early 2002. April Master Trust Results As expected, charge–offs rose 22 bps month over month to 5.29% from 5.07% from March and are 16 bps above the 1Q trust average of 5.13%. We would note a 10 bp benefit to losses from the addition of $511 million in principal receivables to the trust. Delinquency improved 14 bps m/m to 4.99% from 5.13% in Mar., the primary of driver of which was a 13 bps decline in the 90+day bucket to 2.45%. Trust dollars delinquent fell 3% sequentially ($37 million) to $1.403 billion from $1.440 billion. Valuation & Rating Analysis We rate COF Overweight. The stock appears attractively valued at a current premium-tomanaged receivables of 8.8% (10.2% excluding $7.7 billion in auto finance loans). Historically, high quality credit card portfolios have been sold at a premium of 15% to 25%. COF shares have averaged a 30.8% premium-to-managed receivables over the last 5 years, with one-standard deviation boundaries of 45.0% and 16.6%. On a P/E basis, COF shares trade at 9.9x our 2003 EPS estimate of $4.55 versus a 5-year historical 12- month forward average of 19.1x, with 1-standard deviation boundaries of 25.4x and 12.8x.