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Is Capital One (COF) Stock Undervalued Right Now?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to...

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This story originally appeared on Zacks

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

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Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is Capital One (COF). COF is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

We should also highlight that COF has a P/B ratio of 1.05. 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. This stock's P/B looks attractive against its industry's average P/B of 1.06. COF's P/B has been as high as 1.24 and as low as 0.56, with a median of 1.04, over the past year.

Finally, we should also recognize that COF has a P/CF ratio of 4.52. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 5.14. Over the past year, COF's P/CF has been as high as 9.82 and as low as 4.52, with a median of 6.71.

Value investors will likely look at more than just these metrics, but the above data helps show that Capital One is likely undervalued currently. And when considering the strength of its earnings outlook, COF sticks out at as one of the market's strongest value stocks.



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