In mid-May 2025, Capital One Financial Corporation (NYSE: COF) completed a $35.3 billion acquisition of Discover Financial Services, boosting its stock by over 25% and nearing all-time highs. The merger transitions Capital One from a network renter to an owner, projecting $2.7 billion in annual synergies by 2027, signaling strong growth potential.

The acquisition of Discover Financial Services has transformed Capital One into a more profitable entity with significant financial benefits. Owning the network will drive $2.7 billion in annual synergies by 2027, directly impacting profits and increasing the company’s value per share. This shift establishes a strong foundation for higher long-term stock valuation.

Capital One’s acquisition of Discover Financial Services unlocks various growth opportunities, including migrating credit card portfolios to its network and boosting earnings per share (EPS) by over 15% by 2027. The company plans to innovate new products and services, attracting high-spending customers and creating additional revenue streams for future growth.

Despite a strong rally, Capital One’s stock remains reasonably priced with a forward P/E ratio of approximately 14x, compared to the financial sector’s average of around 15.5x. Analysts view the stock favorably, with a consensus rating of Moderate Buy and multiple firms raising price targets post-merger, suggesting further growth potential in the stock’s value.

The acquisition of Discover Financial Services has positioned Capital One as a transformed company poised for growth. With significant synergies, earnings growth catalysts, and a favorable stock valuation, investors with a long-term perspective may find Capital One to be a compelling investment opportunity with continued growth potential.

Read more at Nasdaq: Discover Capital One’s Strategy for Long-Term Stock Growth