With 2011 nearly in the books, it's time to reflect on what has transpired this year and which companies could be facing business-altering decisions in 2012. On today's plate we have Capital One Financial (NYSE: COF), one of the largest credit-card issuers in the U.S.

But before we dig too deeply into what 2012 may have to offer, let's get a quick snapshot of how 2011 treated shareholders:

Year-to-Date Return 0.6%
Price-to-Earnings 5.7
Price-to-Sales 1.4
Cash/Debt $8.5 billion / $35.3 billion
Projected 5-Year Growth Rate 7.5%
Forward P/E 7.0

Source: Yahoo! Finance.

Despite it being a relatively unkind year for financials, Capital One held up pretty well. Compared to large money center banks like Citigroup (NYSE: C), Bank of America (NYSE: BAC), JPMorgan Chase (NYSE: JPM), and Wells Fargo (NYSE: WFC), Capital One relies much more heavily on its credit card division and less on its mortgage lending and investment service divisions. This was a formula that worked for the company in 2011, and the stock moved marginally higher. But that's the past. Let's look ahead and see what could be driving Capital One's stock price in 2012.

What to expect
Because of Capital One's reliance on its credit division for roughly 80% of its revenue, credit card delinquencies and the health of the housing market are likely to take the stage in driving the company's stock price. Just yesterday, new data showed that credit-card delinquencies rose in November by 17 basis points to 5.38%. Although delinquencies remains near historic lows, with such a great reliance on its customers' ability to pay back loans, Capital One shareholders have to view this news with at least some worry.

The continued disaster that is the housing market also indirectly plays a role in the health of Capital One. Many housing stocks, like PulteGroup (NYSE: PHM), which is up 60% in the past three months, ended the year with large run-ups on expectations that the sector is beginning to turn around. But the truth of the matter remains that foreclosure rates are still high and prices remain depressed across the country. With many of the U.S. government's incentives to purchase a house now gone and investors only nibbling despite lending rates hitting 60-plus-year lows, I don't exactly see much to be bullish about in the housing sector in 2012. If default rates on homes rise, it's extremely likely a correlation will develop that will cause Capital One's credit delinquency rates to rise as well.

You might feel it's a surprise that the company is trading for what would seem like a minuscule 5.7 times trailing-12-month earnings. But when you factor in the instability of Europe's banking system and the likelihood that a myriad of austerity measures across Europe could spur a global recession in 2012, the valuation seems considerably fairer -- at least to me.

Foolish roundup
Capital One's success or failure is going to come down to whether or not Capital One's cardholders continue to make their payments in lieu of a poor housing market and a shaky macroeconomic picture. To me there seems to be too much worry built into the stock even at just seven times forward earnings, and that's the primary reason I'm maintaining my underperform rating on CAPS. What's your take on Capital One for 2012?

Share your thoughts in the comments section below and consider adding Capital One Financial to your free and personalized watchlist to keep up on the latest news with the company.

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