Capital One Financial's (NYSE:COF) Earnings Suspect, Card Revenue Better

Some banks have benefited from the release of reserves, which has helped them look better than they performed during the latest quarter, and that's true as well with Capital One Financial (NYSE:COF). Even so there were a couple of good things to take from their earnings report.

FBR says, "We reiterate our rating on COF shares and increase our FY12 EPS estimate to $5.25, from $5.20, while leaving our FY11 EPS unchanged, at $5.30, as 4Q10 results exceeded both FBR's and consensus' earnings estimates. Investors may take a skeptical view of earnings, given reserve release continues to comprise a large portion (nearly 50% of net income, down slightly from 3Q10); however, US Card's revenue margin declined less than expected. Management noted credit will continue to improve at a faster rate than the U.S. economy."

FBR Capital maintains an "Outperform" rating on Capital One Financial (COF), which was trading at $49.49, up $2.24, or 4.74 percent, as of 1:39 PM EST. FBR has a price target of $53 on Capital One.