One can use EBITDA instead of earnings, but we prefer to have our buffer in what is left to the common stockholder. This is also quite an easy to understand approach. Earnings/(Debt and Preferred Payments).Based on the latest annual report and taking into consideration the latest preferred issue, we have a ratio of 47,250/(49,690 + 7,225) = 0.83, which shows good coverage of all debt and preferred stocks. The bigger the ratio, the safer the preferred. This is our main criterion when determining credit risk. Market Cap/(Long-term debt + Preferreds).Common stockholders are last in line when it comes to company assets, which means they will be paid out after creditors, bondholders, and preferred shareholders.īased on our research and experience, these are the most important metrics we use when comparing preferred stocks:.Preferred shareholders have priority over a company's income, meaning they are paid dividends before common shareholders.Here is the moment where I want to remind you of two important aspects of the preferred stocks compared to the common stocks: Our purpose today is not to make an investment decision regarding the common stock of COF but to find out if its new preferred stock has the need quality to be part of our portfolio.
CAPITOL ONE FINANCIAL CORP SERIES
The new Series J preferred stock rank is junior to all outstanding debt and equal to the other preferred stocks of the company that total $5.97B. Source: | Company's Balance SheetĪs of Q3 2019, COF had a total debt of $49.69B ranking senior to the newly issued preferred stock. You can also see how the capital structure evolved historically. Capital Structureīelow you can see a snapshot of Capital One Financial Corporation's capital structure as of its Quarterly Report in June 2019. In addition, with a market capitalization of around $47.25M, COF is the fifth-largest company in the "Credit Services" sector (according to ). For comparison, the yearly dividend expense for all outstanding preferred stocks (with the newly issued Series J preferred stock) of the company is around $335M. As an absolute value, this means it pays $752.5M in dividends yearly. With a market price of $102.03, the current yield of COF is at 1.57%. Since 2015 the common stock distribution is constant and is currently a $1.60 yearly dividend. The Company, along with its subsidiaries, offers a range of financial products and services to consumers, small businesses and commercial clients through branches, the Internet and other distribution channels.īelow, you can see a price chart of the common stock, COF: Here is how the stock's YTC curve looks like right now:Ĭapital One Financial Corporation is a diversified financial services holding company. Currently, the new issue trades a little below its par value at a price of $24.86 and has a 4.83% Current Yield and YTC of 5.11% The new preferred stock has a Standard & Poor's rating of "BB" and is callable as of. You can find some relevant information about the new preferred stock in the table below:Ĭapital One Financial Corporation 4.80% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series J (NYSE: COF-J) pays a qualified fixed dividend at a rate of 4.80%.
The New Issueīefore we submerge into our brief analysis, here is a link to the 424B2 Filing by Capital One Financial Corporation - the prospectus.įor a total of 50 million shares issued, the total gross proceeds to the company are $1.25B.
In this article, we want to shed light on the newest Preferred Stock issued by the company and even though the product may not be of interest to us and our financial objectives, it definitely is worth taking a look at. Last month, Wells Fargo ( WFC) issued its "below-5%" preferred stock, joining several other financials that have taken advantage of the low rate environment, so does Capital One Financial Corporation ( NYSE: COF) now with its newest Preferred Stock IPO, COF-J, after its previous preferred stock, COF-I, issued in September, was right at the 5% threshold.
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