Capital One shares rise 2.2% on revenue beat, Brex acquisition
Credit card lender reports $15.58B revenue, agrees $5.15B deal for fintech startup
Capital One Financial shares rose 2.2% on Thursday after the credit card lender reported better-than-expected quarterly revenue and announced a $5.15 billion acquisition of fintech startup Brex, signaling continued strategic expansion despite margin pressures.
The McLean, Virginia-based company reported quarterly revenue of $15.58 billion, beating analysts' estimates of $15.08 billion. However, adjusted earnings per share of $3.86 fell short of the $4.36 projection, weighed down by higher loan loss provisions and costs related to integrating Discover Financial Services.
The earnings miss, driven by temporary integration expenses, did little to dampen investor enthusiasm. Full-year revenue surged 37% to $53.4 billion, reflecting the impact of Capital One's $35.3 billion acquisition of Discover, which closed in May 2025. The company expects to realize approximately $2.7 billion in annual synergies from that deal by 2026.
Credit quality metrics showed improvement, with delinquencies declining 28 basis points year-over-year to 3.59%. This strengthening credit profile helped offset concerns about margin compression during the integration period.
Capital One said Thursday it has agreed to acquire Brex in a transaction split evenly between cash and stock. Brex, known for its corporate cards and financial services tailored to startups, represents Capital One's latest move to expand its presence in the commercial payments and fintech space.
The deal marks a significant expansion for Capital One beyond its traditional credit card business and into the growing market for startup-focused financial services. Brex's platform and customer base could provide Capital One with access to a younger, technology-driven client segment that aligns with the company's digital-first strategy.
Analysts have taken note of Capital One's acquisition strategy. The stock carries an average target price of $282, according to market data, representing roughly 20% upside from current levels. Of the 23 analysts covering the company, 17 rate it a buy or strong buy, while five recommend holding shares.
The shares have been among the market's more consistent performers, with CNBC noting that Capital One has been a winning trade for 13 consecutive earnings reports leading up to Thursday's announcement. The stock has gained approximately 66% over the past year, significantly outperforming the broader financial sector.
Thursday's price action suggests investors are looking past near-term margin compression to focus on Capital One's long-term growth trajectory. The combination of strong revenue growth, improving credit quality, and strategic acquisitions positions the company to benefit from continued expansion in the digital payments market.
The Brex deal, coming just eight months after the Discover acquisition, underscores Chief Executive Officer Richard Fairbank's aggressive approach to growth through transformational deals. Both transactions are designed to diversify Capital One's revenue streams and strengthen its competitive position in an increasingly consolidated financial services landscape.
With a market capitalization of $146.3 billion, Capital One has established itself as one of the largest credit card issuers in the United States. The company's focus on data analytics and technology-driven underwriting has helped it maintain strong growth even as traditional banks face increasing competition from fintech disruptors.