COF

Why Does Capital One Financial (COF) get No Love from Analysts?

Capital One Financial may be undervalued, but the 20 analysts following the company give it an rating of hold because of its poor growth indicators. Their target prices range from $79.0 to $162.0 per share, for an average of $110.27. At today's price of $91.84, Capital One Financial is trading -16.71% away from its average target price, suggesting there is an analyst consensus of some upside potential for the stock.

Capital One Financial Corporation operates as the financial services holding company for the Capital One Bank (USA), National Association; and Capital One, National Association, which provides various financial products and services in the United States, Canada, and the United Kingdom. Based in McLean, VA, the large-cap Finance company has 56,100 full time employees. Capital One Financial has provided a 2.6% dividend yield over the last 12 months.

Capital One Financial has a trailing twelve month P/E ratio of 6.3, compared to an average of 14.34 for the Finance sector. Based on its EPS guidance of 14.28, the company has a forward P/E ratio of 6.4.

The average compound growth rate of the company's historical and projected earnings per share is 5.3%. On this basis, the company's PEG ratio is 1.28. However, this growth rate is probably not sustainable. In its place we will use the broader market's estimated 5-year EPS growth rate of 6.0%, which gives us a PEG ratio of 1.12. This shows that Capital One Financial is fairly priced.

Furthermore, the market is potentially undervaluing Capital One Financial in terms of its book value because its P/B ratio is 0.7. In comparison, the sector average P/B ratio is 1.57. The company's shares are currently -55.4% below their Graham number, indicating that its shares have a margin of safety.

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $28,593 $28,523 $30,435 $34,250
Revenue Growth n/a -0.24% 6.7% 12.53%
Net Margins 19.4% 9.52% 40.71% 21.49%
Net Margins Growth n/a -50.93% 327.63% -47.21%
Earnings Per Share $11.05 $5.18 $26.94 $14.6
EPS Growth n/a -53.12% 420.08% -45.81%
Diluted Shares (MM) 470 459 444 382
Free Cash Flow (MM) $15,752 $15,989 $11,612 $12,875
FCF Growth n/a 1.5% -27.38% 10.88%
Capital Expenditures (MM) -$887 -$710 -$698 -$934
Net Debt / EBITDA 1.61 n/a n/a n/a
The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

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