Attractive Price-to-Earnings Ratio
Low Price-to-Book Ratio
Strong Net Profit Margin
Consistent Gross Profit Margin
Low Debt-to-Equity Ratio
Strong Financial Performance
Diverse and Stable Portfolio
Strong Market Position and Competitive Advantages
Growth in Consumer Banking and Auto Loans
Strategic Acquisition of Discover
Stabilizing Credit Metrics
Concerns Over Debt Levels
High Price-to-Cash Flow Ratio
Moderate Return on Equity
Operating Profit Margin Concerns
Liquidity Ratios Below Standard
Weak Interest Coverage
Increased Non-Interest Expense
Rising Charge-Off Rates
Potential for Economic Pressures
Regulatory Approval Delays
Capital One demonstrates strong business quality through solid financial performance, a diverse portfolio, and competitive advantages, though faces challenges with increasing expenses and charge-off rates. Future prospects are bolstered by growth initiatives in consumer banking and a strategic acquisition, while economic pressures and regulatory hurdles present potential risks.
Analysis Date: January 21, 2025
Last Updated: March 11, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$477.85
Current Market Price: $150.67
IV/P Ratio: 3.17x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
68.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for COF
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (12.13)
P/B ratio ≤ 1.5 (0.95)
Current ratio ≥ 2.0
Long-term debt < Net current assets
Margin of safety (68.0%)
COF does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
The net profit margin of 10.21% indicates that the company retains a solid portion of its revenue as profit, reflecting efficient cost management.
The gross profit margin of 100.06% indicates strong pricing power and effective cost of goods sold management.
The return on equity of 7.93% is relatively low, suggesting that the company may not be utilizing its equity effectively to generate profits.
The operating profit margin of 11.39% is moderate, indicating potential room for improvement in operational efficiency.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
7.93%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
0.22%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
100.06%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
10.21%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
With a debt-to-equity ratio of 0.74, the company maintains a manageable level of debt relative to its equity, indicating a balanced approach to financing.
The current ratio and quick ratio both stand at 0.0, indicating potential liquidity issues, as the company may struggle to meet short-term obligations.
An interest coverage ratio of 0.36 suggests that the company may have difficulty covering its interest expenses, raising concerns about its ability to manage debt.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.74x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
COF: No data available
Capital One reported significant earnings with a fourth-quarter net income of $1.1 billion, and a full-year earnings of $4.8 billion. The adjusted earnings per share for the full year was $13.96, showcasing robust profitability.
Capital One has a diverse business model that includes credit cards, consumer banking, and commercial banking. Their Domestic Card business continues to see top-line growth and stable credit metrics even amidst economic pressures.
Capital One has a strong presence in the credit card sector, with a focus on high-value customer segments. Their strategic investments in technology and marketing continue to enhance their competitive edge.
The company faced a 13% increase in non-interest expenses in the fourth quarter, driven by higher marketing spend and operating expenses, which could impact future profitability.
The company reported a sequential increase in charge-off rates, which could indicate potential credit quality deterioration in certain segments.
Capital One's Consumer Banking segment saw auto originations increase by 53% year-over-year, indicating a strong recovery and potential for further growth in 2025.
The acquisition of Discover is expected to enhance Capital One's competitive position in consumer banking and global payments, potentially increasing customer base and market reach.
Improvement in delinquency rates and credit performance trends suggest that Capital One is positioned well for future credit stability and growth.
High interest rates and inflationary pressures may impact consumer spending and credit performance, posing challenges for future growth.
Pending regulatory approvals for the Discover acquisition may delay full integration and realization of synergies, affecting short-term growth.