Capital One Financial (NYSE: COF) stock fell 6% after exceeding revenue expectations but missing earnings estimates in its Q4 2025 report. Despite the drop, COF still trades at a high P/E ratio of over 74x, signaling a premium valuation compared to historical averages in the financial sector.

COF’s Q4 numbers showed a 24% increase in earnings per share and a 53% jump in revenue year-over-year, indicating growth. This expansion phase suggests potential for continued growth in 2026, though some investors believe this growth was already priced into COF stock pre-earnings.

Capital One announced plans to acquire Brex Inc., a financial services startup, for $5.15 billion in a deal expected to close in Q2 2026. Brex specializes in corporate credit cards and services, targeting startups and businesses overlooked by traditional providers like American Express.

The Brex acquisition aligns with Capital One’s long-term strategy to innovate in the payments industry. By acquiring Brex, Capital One aims to compete with fintech companies at the forefront of the technology revolution, differentiating itself from other banks’ partnership approaches.

Investors are cautious about Capital One’s acquisition spree, with the Brex deal following a $35 billion acquisition of Discover Financial less than a year ago. However, the Brex acquisition could enhance Capital One’s competitiveness against giants like Visa and Mastercard, without significantly altering its debt outlook.

COF stock presents a potential buy-the-dip opportunity post-earnings, trading near a support level and showing signs of bouncing off oversold levels. Analysts forecast a 24% upside for COF stock, with momentum indicators suggesting a potential rebound. Consider entry points below the 20-day SMA for potential gains.

Read more at Nasdaq: Capital One Stock Weak After Earnings, Brex Deal in Focus