Intrinsic value of Capital One Financial - COF

Previous Close

$97.23

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$97.23

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

Our model is not good at valuating stocks of financial companies, such as COF.

We calculate the intrinsic value of COF stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 47.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  3.40
  3.56
  3.70
  3.83
  3.95
  4.06
  4.15
  4.23
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.82
  4.84
  4.86
  4.87
  4.89
  4.90
  4.91
  4.92
  4.92
Revenue, $m
  20,355
  21,080
  21,861
  22,699
  23,595
  24,552
  25,571
  26,654
  27,803
  29,021
  30,310
  31,673
  33,114
  34,635
  36,240
  37,933
  39,717
  41,597
  43,577
  45,661
  47,855
  50,164
  52,594
  55,149
  57,836
  60,661
  63,632
  66,754
  70,036
  73,485
Variable operating expenses, $m
  14,493
  15,009
  15,565
  16,162
  16,800
  17,481
  18,207
  18,978
  19,796
  20,663
  21,581
  22,552
  23,577
  24,660
  25,803
  27,008
  28,278
  29,617
  31,027
  32,511
  34,073
  35,717
  37,447
  39,266
  41,179
  43,191
  45,306
  47,529
  49,865
  52,321
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  14,493
  15,009
  15,565
  16,162
  16,800
  17,481
  18,207
  18,978
  19,796
  20,663
  21,581
  22,552
  23,577
  24,660
  25,803
  27,008
  28,278
  29,617
  31,027
  32,511
  34,073
  35,717
  37,447
  39,266
  41,179
  43,191
  45,306
  47,529
  49,865
  52,321
Operating income, $m
  5,862
  6,071
  6,296
  6,537
  6,796
  7,071
  7,365
  7,676
  8,007
  8,358
  8,729
  9,122
  9,537
  9,975
  10,437
  10,925
  11,438
  11,980
  12,550
  13,150
  13,782
  14,447
  15,147
  15,883
  16,657
  17,470
  18,326
  19,225
  20,170
  21,164
EBITDA, $m
  43,227
  44,765
  46,424
  48,203
  50,107
  52,139
  54,303
  56,603
  59,043
  61,629
  64,367
  67,262
  70,321
  73,551
  76,959
  80,554
  84,343
  88,335
  92,539
  96,966
  101,626
  106,529
  111,688
  117,114
  122,820
  128,820
  135,128
  141,759
  148,728
  156,052
Interest expense (income), $m
  2,250
  17,054
  16,058
  16,492
  16,961
  17,464
  18,002
  18,576
  19,187
  19,837
  20,526
  21,257
  22,030
  22,848
  23,713
  24,625
  25,588
  26,604
  27,674
  28,802
  29,990
  31,241
  32,558
  33,943
  35,401
  36,934
  38,546
  40,241
  42,023
  43,897
  45,866
Earnings before tax, $m
  -11,192
  -9,986
  -10,196
  -10,424
  -10,668
  -10,931
  -11,211
  -11,511
  -11,829
  -12,168
  -12,528
  -12,908
  -13,312
  -13,738
  -14,188
  -14,664
  -15,165
  -15,695
  -16,252
  -16,840
  -17,459
  -18,110
  -18,796
  -19,518
  -20,277
  -21,075
  -21,915
  -22,798
  -23,726
  -24,702
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -11,192
  -9,986
  -10,196
  -10,424
  -10,668
  -10,931
  -11,211
  -11,511
  -11,829
  -12,168
  -12,528
  -12,908
  -13,312
  -13,738
  -14,188
  -14,664
  -15,165
  -15,695
  -16,252
  -16,840
  -17,459
  -18,110
  -18,796
  -19,518
  -20,277
  -21,075
  -21,915
  -22,798
  -23,726
  -24,702

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  251,300
  260,247
  269,886
  280,232
  291,302
  303,115
  315,694
  329,062
  343,249
  358,284
  374,199
  391,030
  408,815
  427,593
  447,407
  468,304
  490,331
  513,539
  537,983
  563,719
  590,808
  619,314
  649,304
  680,849
  714,022
  748,903
  785,574
  824,122
  864,638
  907,218
Adjusted assets (=assets-cash), $m
  251,300
  260,247
  269,886
  280,232
  291,302
  303,115
  315,694
  329,062
  343,249
  358,284
  374,199
  391,030
  408,815
  427,593
  447,407
  468,304
  490,331
  513,539
  537,983
  563,719
  590,808
  619,314
  649,304
  680,849
  714,022
  748,903
  785,574
  824,122
  864,638
  907,218
Revenue / Adjusted assets
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
Average production assets, $m
  373,642
  386,944
  401,276
  416,660
  433,119
  450,683
  469,385
  489,262
  510,355
  532,709
  556,373
  581,398
  607,841
  635,761
  665,222
  696,291
  729,041
  763,548
  799,892
  838,158
  878,435
  920,819
  965,409
  1,012,310
  1,061,634
  1,113,496
  1,168,020
  1,225,334
  1,285,575
  1,348,885
Working capital, $m
  -312,719
  -323,852
  -335,847
  -348,722
  -362,497
  -377,198
  -392,850
  -409,486
  -427,140
  -445,849
  -465,655
  -486,599
  -508,730
  -532,098
  -556,755
  -582,759
  -610,169
  -639,049
  -669,467
  -701,494
  -735,204
  -770,677
  -807,996
  -847,250
  -888,531
  -931,937
  -977,571
  -1,025,540
  -1,075,958
  -1,128,945
Total debt, $m
  297,361
  305,413
  314,089
  323,400
  333,363
  343,995
  355,315
  367,347
  380,115
  393,646
  407,970
  423,118
  439,124
  456,025
  473,858
  492,665
  512,489
  533,376
  555,375
  578,538
  602,918
  628,574
  655,565
  683,955
  713,811
  745,204
  778,208
  812,901
  849,365
  887,687
Total liabilities, $m
  226,170
  234,222
  242,898
  252,209
  262,172
  272,804
  284,124
  296,156
  308,924
  322,455
  336,779
  351,927
  367,933
  384,834
  402,667
  421,474
  441,298
  462,185
  484,184
  507,347
  531,727
  557,383
  584,374
  612,764
  642,620
  674,013
  707,017
  741,710
  778,174
  816,496
Total equity, $m
  25,130
  26,025
  26,989
  28,023
  29,130
  30,312
  31,569
  32,906
  34,325
  35,828
  37,420
  39,103
  40,881
  42,759
  44,741
  46,830
  49,033
  51,354
  53,798
  56,372
  59,081
  61,931
  64,930
  68,085
  71,402
  74,890
  78,557
  82,412
  86,464
  90,722
Total liabilities and equity, $m
  251,300
  260,247
  269,887
  280,232
  291,302
  303,116
  315,693
  329,062
  343,249
  358,283
  374,199
  391,030
  408,814
  427,593
  447,408
  468,304
  490,331
  513,539
  537,982
  563,719
  590,808
  619,314
  649,304
  680,849
  714,022
  748,903
  785,574
  824,122
  864,638
  907,218
Debt-to-equity ratio
  11.830
  11.740
  11.640
  11.540
  11.440
  11.350
  11.260
  11.160
  11.070
  10.990
  10.900
  10.820
  10.740
  10.660
  10.590
  10.520
  10.450
  10.390
  10.320
  10.260
  10.200
  10.150
  10.100
  10.050
  10.000
  9.950
  9.910
  9.860
  9.820
  9.780
Adjusted equity ratio
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -11,192
  -9,986
  -10,196
  -10,424
  -10,668
  -10,931
  -11,211
  -11,511
  -11,829
  -12,168
  -12,528
  -12,908
  -13,312
  -13,738
  -14,188
  -14,664
  -15,165
  -15,695
  -16,252
  -16,840
  -17,459
  -18,110
  -18,796
  -19,518
  -20,277
  -21,075
  -21,915
  -22,798
  -23,726
  -24,702
Depreciation, amort., depletion, $m
  37,364
  38,694
  40,128
  41,666
  43,312
  45,068
  46,938
  48,926
  51,036
  53,271
  55,637
  58,140
  60,784
  63,576
  66,522
  69,629
  72,904
  76,355
  79,989
  83,816
  87,844
  92,082
  96,541
  101,231
  106,163
  111,350
  116,802
  122,533
  128,557
  134,888
Funds from operations, $m
  26,172
  28,708
  29,931
  31,242
  32,644
  34,138
  35,727
  37,416
  39,206
  41,103
  43,110
  45,231
  47,473
  49,838
  52,334
  54,965
  57,739
  60,660
  63,737
  66,976
  70,385
  73,972
  77,745
  81,713
  85,887
  90,274
  94,887
  99,735
  104,831
  110,186
Change in working capital, $m
  -10,283
  -11,133
  -11,995
  -12,875
  -13,775
  -14,700
  -15,653
  -16,636
  -17,654
  -18,709
  -19,805
  -20,945
  -22,131
  -23,368
  -24,657
  -26,004
  -27,410
  -28,880
  -30,418
  -32,026
  -33,710
  -35,473
  -37,320
  -39,254
  -41,281
  -43,406
  -45,633
  -47,969
  -50,418
  -52,987
Cash from operations, $m
  36,455
  39,841
  41,927
  44,117
  46,419
  48,838
  51,380
  54,052
  56,860
  59,812
  62,915
  66,176
  69,604
  73,206
  76,991
  80,969
  85,149
  89,541
  94,155
  99,002
  104,095
  109,445
  115,064
  120,967
  127,168
  133,680
  140,520
  147,704
  155,249
  163,173
Maintenance CAPEX, $m
  -36,136
  -37,364
  -38,694
  -40,128
  -41,666
  -43,312
  -45,068
  -46,938
  -48,926
  -51,036
  -53,271
  -55,637
  -58,140
  -60,784
  -63,576
  -66,522
  -69,629
  -72,904
  -76,355
  -79,989
  -83,816
  -87,844
  -92,082
  -96,541
  -101,231
  -106,163
  -111,350
  -116,802
  -122,533
  -128,557
New CAPEX, $m
  -12,279
  -13,302
  -14,332
  -15,383
  -16,459
  -17,564
  -18,702
  -19,877
  -21,093
  -22,354
  -23,664
  -25,025
  -26,443
  -27,920
  -29,461
  -31,070
  -32,750
  -34,507
  -36,344
  -38,266
  -40,277
  -42,384
  -44,590
  -46,901
  -49,324
  -51,862
  -54,524
  -57,314
  -60,241
  -63,310
Cash from investing activities, $m
  -48,415
  -50,666
  -53,026
  -55,511
  -58,125
  -60,876
  -63,770
  -66,815
  -70,019
  -73,390
  -76,935
  -80,662
  -84,583
  -88,704
  -93,037
  -97,592
  -102,379
  -107,411
  -112,699
  -118,255
  -124,093
  -130,228
  -136,672
  -143,442
  -150,555
  -158,025
  -165,874
  -174,116
  -182,774
  -191,867
Free cash flow, $m
  -11,960
  -10,825
  -11,100
  -11,393
  -11,706
  -12,038
  -12,390
  -12,764
  -13,159
  -13,578
  -14,020
  -14,486
  -14,979
  -15,498
  -16,046
  -16,623
  -17,230
  -17,870
  -18,544
  -19,253
  -19,998
  -20,783
  -21,608
  -22,475
  -23,387
  -24,345
  -25,353
  -26,412
  -27,525
  -28,694
Issuance/(repayment) of debt, $m
  -18,458
  8,052
  8,676
  9,312
  9,963
  10,632
  11,321
  12,032
  12,768
  13,531
  14,324
  15,148
  16,006
  16,900
  17,833
  18,807
  19,824
  20,887
  21,999
  23,163
  24,380
  25,655
  26,991
  28,390
  29,856
  31,393
  33,004
  34,693
  36,464
  38,322
Issuance/(repurchase) of shares, $m
  37,248
  10,881
  11,160
  11,458
  11,775
  12,112
  12,469
  12,848
  13,248
  13,672
  14,119
  14,592
  15,090
  15,616
  16,170
  16,753
  17,368
  18,015
  18,697
  19,413
  20,168
  20,961
  21,795
  22,672
  23,594
  24,563
  25,582
  26,653
  27,778
  28,960
Cash from financing (excl. dividends), $m  
  18,790
  18,933
  19,836
  20,770
  21,738
  22,744
  23,790
  24,880
  26,016
  27,203
  28,443
  29,740
  31,096
  32,516
  34,003
  35,560
  37,192
  38,902
  40,696
  42,576
  44,548
  46,616
  48,786
  51,062
  53,450
  55,956
  58,586
  61,346
  64,242
  67,282
Total cash flow (excl. dividends), $m
  6,830
  8,108
  8,736
  9,376
  10,032
  10,705
  11,399
  12,115
  12,857
  13,625
  14,423
  15,253
  16,117
  17,018
  17,957
  18,937
  19,962
  21,032
  22,152
  23,324
  24,550
  25,834
  27,178
  28,587
  30,063
  31,611
  33,233
  34,934
  36,718
  38,588
Retained Cash Flow (-), $m
  -37,248
  -10,881
  -11,160
  -11,458
  -11,775
  -12,112
  -12,469
  -12,848
  -13,248
  -13,672
  -14,119
  -14,592
  -15,090
  -15,616
  -16,170
  -16,753
  -17,368
  -18,015
  -18,697
  -19,413
  -20,168
  -20,961
  -21,795
  -22,672
  -23,594
  -24,563
  -25,582
  -26,653
  -27,778
  -28,960
Prev. year cash balance distribution, $m
  926
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  236
  244
  253
  262
  272
  283
  295
  307
  320
  334
  348
  364
  380
  397
  416
  435
  455
  477
  499
  523
  548
  574
  602
  631
  662
  694
  728
  764
  801
  840
Cash available for distribution, $m
  -29,492
  -2,774
  -2,425
  -2,082
  -1,743
  -1,406
  -1,070
  -732
  -391
  -46
  304
  662
  1,027
  1,402
  1,787
  2,184
  2,594
  3,017
  3,455
  3,910
  4,382
  4,873
  5,383
  5,915
  6,469
  7,047
  7,651
  8,281
  8,940
  9,628
Discount rate, %
  14.80
  15.54
  16.32
  17.13
  17.99
  18.89
  19.83
  20.83
  21.87
  22.96
  24.11
  25.31
  26.58
  27.91
  29.30
  30.77
  32.31
  33.92
  35.62
  37.40
  39.27
  41.23
  43.29
  45.46
  47.73
  50.12
  52.62
  55.26
  58.02
  60.92
PV of cash for distribution, $m
  -25,690
  -2,078
  -1,541
  -1,106
  -762
  -498
  -302
  -161
  -66
  -6
  28
  44
  48
  45
  38
  30
  22
  16
  11
  7
  4
  2
  1
  1
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  34.9
  24.4
  17.1
  12.1
  8.5
  6.0
  4.3
  3.1
  2.2
  1.6
  1.1
  0.8
  0.6
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Capital One Financial Corporation is a diversified financial services holding company. The Company, along with its subsidiaries, offers a range of financial products and services to consumers, small businesses and commercial clients through branches, the Internet and other distribution channels. The Company's segments include Credit Card, Consumer Banking, Commercial Banking and Other. The Credit Card segment consists of its domestic consumer and small business card lending, and the international card lending businesses in Canada and the United Kingdom. The Consumer Banking segment consists of its branch-based lending and deposit gathering activities for consumers and small businesses, national deposit gathering, national auto lending and consumer home loan lending and servicing activities. The Commercial Banking consists of its lending, deposit gathering and treasury management services to commercial real estate, and commercial and industrial customers.

FINANCIAL RATIOS  of  Capital One Financial (COF)

Valuation Ratios
P/E Ratio 12.4
Price to Sales 0
Price to Book 1
Price to Tangible Book
Price to Cash Flow 3.9
Price to Free Cash Flow 4.2
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 46.4%
Cap. Spend. - 3 Yr. Gr. Rate -1%
Financial Strength
Quick Ratio 0
Current Ratio NaN
LT Debt to Equity 69.9%
Total Debt to Equity 91%
Interest Coverage 3
Management Effectiveness
Return On Assets 1.5%
Ret/ On Assets - 3 Yr. Avg. 1.7%
Return On Total Capital 4.2%
Ret/ On T. Cap. - 3 Yr. Avg. 5.1%
Return On Equity 7.9%
Return On Equity - 3 Yr. Avg. 9%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 31.3%
Eff/ Tax Rate - 3 Yr. Avg. 31.9%
Payout Ratio 27.4%

COF stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the COF stock intrinsic value calculation we used $19686 million for the last fiscal year's total revenue generated by Capital One Financial. The default revenue input number comes from 2017 income statement of Capital One Financial. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our COF stock valuation model: a) initial revenue growth rate of 3.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 14.8%, whose default value for COF is calculated based on our internal credit rating of Capital One Financial, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Capital One Financial.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of COF stock the variable cost ratio is equal to 71.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for COF stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Capital One Financial.

Corporate tax rate of 27% is the nominal tax rate for Capital One Financial. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the COF stock is equal to 1.2%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for COF are equal to 1835.6%.

Life of production assets of 10 years is the average useful life of capital assets used in Capital One Financial operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for COF is equal to -1536.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $0 million for Capital One Financial - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 485 million for Capital One Financial is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Capital One Financial at the current share price and the inputted number of shares is $47.2 billion.

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COMPANY NEWS

▶ [$$] Capital One Profit Surges on Strong Card Spending, Lower Losses   [Jul-19-18 08:28PM  The Wall Street Journal]
▶ Capital One: 2Q Earnings Snapshot   [04:34PM  Associated Press]
▶ Day Ahead: Top 3 Things to Watch   [Jul-18-18 07:44PM  Investing.com]
▶ Time for Margin Expansion at Capital One   [07:00AM  Morningstar]
▶ [$$] Walmart in Talks to Move Credit-Card Partnership to Capital One   [Jul-12-18 08:33PM  The Wall Street Journal]
▶ Capital One Stock Could Reward Investors   [10:33AM  Barrons.com]
▶ Best Banks for Families With Students, 2018   [Jul-06-18 04:13PM  Kiplinger]
▶ [$$] Capital One Names New President of Canada Unit   [Jul-05-18 01:29PM  The Wall Street Journal]
▶ How Capital One Makes its Profits   [01:28PM  Investopedia]
▶ Here's what's next for the Greater Washington Partnership   [Jun-27-18 09:57AM  American City Business Journals]
▶ San Francisco fintech LendUp adds star power to boardroom   [10:30AM  American City Business Journals]
▶ CEOs employees ranked as the best   [Jun-20-18 01:12PM  Yahoo Finance Video]
▶ Lou Mastrianni joins Capital One from JP Morgan   [Jun-19-18 10:27AM  American City Business Journals]
▶ Time to cash in: Who benefits from the Capitals' historic Stanley Cup victory?   [Jun-08-18 05:12PM  American City Business Journals]
▶ [$$] The Cloud Offers Security Advantages for Companies Willing to Adapt   [Jun-07-18 06:41PM  The Wall Street Journal]
▶ No change, no excuse   [May-29-18 01:15PM  Yahoo Finance Video]
▶ Even if the Caps don't lift the Stanley Cup, Capital One is already a winner   [May-25-18 05:00AM  American City Business Journals]
▶ Apple and Goldman Sachs reportedly teaming up for new credit card   [May-10-18 01:21PM  Yahoo Finance Video]
▶ [$$] Capital One Sells $17 Billion of Mortgages   [12:15AM  The Wall Street Journal]
▶ Capital One Announces Quarterly Dividend   [May-03-18 05:05PM  PR Newswire]
▶ Heres Why Capital One Is Down Today   [Apr-25-18 03:41PM  Motley Fool]
▶ JPMorgan Chase vows a regional expansion. Does an acquisition make sense?   [Apr-24-18 04:48PM  American City Business Journals]
▶ Capital One: 1Q Earnings Snapshot   [04:28PM  Associated Press]
▶ 3 Stocks Set to Beat Q1 Earnings Estimates   [Apr-19-18 09:20AM  InvestorPlace]
▶ 3 Stocks Set to Beat Q1 Earnings Estimates   [Apr-18-18 01:20PM  Zacks]
▶ 10 Stocks That Can Thrive as Rates Soar   [Apr-16-18 08:00AM  Investopedia]
▶ Capital One is teaming up with NYU for diversity initiative   [06:00AM  American City Business Journals]
▶ Small Bank Stocks for Value, Yield and Takeover Potential   [Apr-13-18 08:00AM  Investopedia]
▶ Get Started: Surveys shows owners are optimistic, cautious   [Apr-09-18 11:20AM  Associated Press]
▶ Why Amazon wants Alexa to take on PayPal's Venmo   [Apr-06-18 05:58PM  American City Business Journals]
▶ Citi Goes Shopping For Credit Card Initiations   [Apr-05-18 04:50PM  Benzinga]
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