At $90.18, Is It Time To Buy Capital One Financial Corporation (NYSE:COF)?
Today we’re going to take a look at the well-established Capital One Financial Corporation (NYSE:COF). The company’s stock received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $100.79 at one point, and dropping to the lows of $87.92. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Capital One Financial’s current trading price of $90.18 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Capital One Financial’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for Capital One Financial
What is Capital One Financial worth?
According to my valuation model, Capital One Financial seems to be fairly priced at around 12.35% below my intrinsic value, which means if you buy Capital One Financial today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $102.88, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Capital One Financial’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Capital One Financial generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to more than double over the next couple of years, the future seems bright for Capital One Financial. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in COF’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on COF, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Capital One Financial. You can find everything you need to know about Capital One Financial in the latest infographic research report. If you are no longer interested in Capital One Financial, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
