Investors in Capital One Financial (NYSE:COF) have seen respectable returns of 84% over the past five years

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If you buy and hold a stock for many years, you’d hope to be making a profit. But more than that, you probably want to see it rise more than the market average. Unfortunately for shareholders, while the Capital One Financial Corporation (NYSE:COF) share price is up 68% in the last five years, that’s less than the market return. Some buyers are laughing, though, with an increase of 37% in the last year.

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So let’s assess the underlying fundamentals over the last 5 years and see if they’ve moved in lock-step with shareholder returns.

View our latest analysis for Capital One Financial

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Capital One Financial’s earnings per share are down 1.2% per year, despite strong share price performance over five years.

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So it’s hard to argue that the earnings per share are the best metric to judge the company, as it may not be optimized for profits at this point. Therefore, it’s worth taking a look at other metrics to try to understand the share price movements.

We doubt the modest 1.4% dividend yield is attracting many buyers to the stock. On the other hand, Capital One Financial’s revenue is growing nicely, at a compound rate of 6.4% over the last five years. In that case, the company may be sacrificing current earnings per share to drive growth.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

NYSE:COF Earnings and Revenue Growth January 12th 2025

Capital One Financial is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So we recommend checking out this free report showing consensus forecasts

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Capital One Financial, it has a TSR of 84% for the last 5 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

We’re pleased to report that Capital One Financial shareholders have received a total shareholder return of 40% over one year. That’s including the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 13% per year), it would seem that the stock’s performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Capital One Financial is showing 1 warning sign in our investment analysis , you should know about…

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