COF
Capital One Financial Corporation
$208.30
Banks, Insurers & Asset Managers
80%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 16.2% above fair value
You pay
$208.30
Bear
$125.47
Fair
$179.25
Bull
$233.03
Bear
$125.47
-39.8%
ROTCE 4.0% → 0.30x TBV
Fair
$179.25
-13.9%
ROTCE 3.6% → 0.30x TBV
Bull
$233.03
+11.9%
ROTCE 4.1% → 0.30x TBV
Adjust Assumptions
3.6%
9.9%
Key Value Driver
ROTCE (3.6%) vs. cost of equity (9.9%)
Implied Market Multiple
1.86x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (57 analysts)
$256.62
Divergence from AlphaVal
30%
Summary
With ROTCE of 3.6% vs. 9.9% cost of equity, fair P/TBV is 0.30x on $111.70 tangible book, implying $179.25 per share. DDM cross-check: $85.47.
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 (9.9%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $85.47 (52% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $256.62 (from 57 analysts). Our estimate is 30% 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