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 US$98.08 at one point, and dropping to the lows of US$83.11. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Capital One Financial's current trading price of US$91.13 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.
What is Capital One Financial worth?
Great news for investors – Capital One Financial is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is $130.27, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Capital One Financial’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of Capital One Financial look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a relatively muted profit growth of 0.8% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Capital One Financial, at least in the short term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since COF is currently undervalued, it may be a great time to increase your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on COF for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy COF. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.