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Are Investors Undervaluing Capital One (COF) Right Now?

Zacks Equity Research
Fly Leasing (FLY) closed at $17.10 in the latest trading session, marking a -0.41% move from the prior day.

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is Capital One (COF). COF is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.

We should also highlight that COF has a P/B ratio of 0.70. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. COF's current P/B looks attractive when compared to its industry's average P/B of 0.78. COF's P/B has been as high as 1.05 and as low as 0.70, with a median of 0.94, over the past year.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. COF has a P/S ratio of 1.07. This compares to its industry's average P/S of 1.16.

These are just a handful of the figures considered in Capital One's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that COF is an impressive value stock right now.


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