Capital One Financial Corp. (COF): More Than the Card in Your Wallet

Fourth quarter estimates for Capital One were below projections and analysts have cut price targets, so the share price took a knee-jerk dip. At its current price, it is trading at a discount when considering long-term projections and price targets, even after the cuts. Consensus estimates put EPS at $6.53 for 2013, which translates to the stock trading at under nine times forward earnings. The previously mentioned peer Bank of America trades at a similar valuation, but don’t forget about the excessive liabilities.

If the numbers on financial companies stress you out, take a deep breath and switch to a consumer perspective. Both Capital One and Bank of America offer checking account services. It’s tough to get interest rates of any amount today, but if you want one at the big banks, you’re likely going to be charged a fee unless you have a high balance, which most consumers do not maintain. Even with this premium account, Bank of America has a maximum rate of 0.03%. This isn’t a good sign of financial health.

This may sound more like advertising, but with any bias aside, charges are simply less at some companies. Capital One waives their fees for checking accounts with a daily balance of just $300. They offer rewards programs on both basic and “premier” checking, offer a rate of up to 1% on high yield checking (which does, however, have a high required balance), and even offers completely free online checking through Capital One 360, which was recently created from ING Direct. The bottom line: the company offers a variety of services that appeal to every type of consumer, and checking accounts are just the tip of the iceberg. In the most basic summarization, services need to be attractive to generate profits and returns for shareholders.

Stock talk of banks may be too much for some to handle, even if the reports contain good news. For a balanced investment consideration, it is comforting to invest in companies that you use, would use, and would recommend to others. If you’re not confident in your portfolio’s companies, good luck sleeping at night.

The article More Than the Card in Your Wallet originally appeared on Fool.com and is written by Kyle Vaughan.

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