EPS & Earnings ... Hits & Misses

[madrose1]

COF $78-71-72 misses by $0.35, lowers FY07 guidance (77.34 -0.34) : Reports Q1 (Mar) earnings of $1.62 per share, $0.35 worse than the Reuters Estimates consensus of $1.97; revenues rose 12.0% year/year to $3.43 bln vs the $4.07 bln consensus. Co lowers guidance for FY07, sees EPS of $7.00-7.40 vs. $7.68 consensus. The co said their lowered guidance was to reflect revised expectations for their mortgage banking business, which posted a modest loss in the first quarter. Co also says "...Assuming no improvement in the unusually weak conditions now present in the secondary market for non-conforming prime mortgage loans, including Alt-A, we expect that reduced volumes and margins would result in our mortgage banking business delivering no incremental earnings for the balance of 2007,... Our expectations for consumer credit to return to more normal levels and the yield curve to remain flat are unchanged. The co's core operations remain strong, and infrastructure upgrades completed in the quarter will provide opportunities to generate efficiencies and cost savings benefits in the future."

Capital One downgraded to Market Perform at Friedman Billings - tgt cut to $80 from $100 (77.34 ) : Friedman Billings downgrades COF to Market Perform from Outperform and cuts their tgt to $80 from $100 following earnings. The firm says while troubles in the Alt-A mortgage business pressured earnings, the majority of the miss came from poor revenue and credit performance in the U.S Card and Auto platforms. The firm says while mgmt attributed the reduction in guidance to the Alt-A market, they were surprised by the degree of deterioration in core business performance (credit card and auto), coupled with mgmt's more bearish outlook for the US credit card landscape