COF
Capital One Financial Corporation
$202.35
Banks, Insurers & Asset Managers
80%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Overvalued
Trading 12.9% above fair value
You pay
$202.35
Bear
$125.47
Fair
$179.25
Bull
$233.03
Bear
$125.47
-38.0%
ROTCE 4.0% → 0.30x TBV
Fair
$179.25
-11.4%
ROTCE 3.6% → 0.30x TBV
Bull
$233.03
+15.2%
ROTCE 4.1% → 0.30x TBV
Adjust Assumptions
3.6%
10.0%
Key Value Driver
ROTCE (3.6%) vs. cost of equity (10.0%)
Implied Market Multiple
1.81x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (57 analysts)
$251.78
Divergence from AlphaVal
29%
Summary
With ROTCE of 3.6% vs. 10.0% cost of equity, fair P/TBV is 0.30x on $111.70 tangible book, implying $179.25 per share. DDM cross-check: $82.72.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Return on equity (3.6%) is below the minimum investors require (10.0%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $82.72 (54% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $251.78 (from 57 analysts). Our estimate is 29% below the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly