Based on the provided data and current market context, here's an analysis of whether COF is overvalued:
Valuation Analysis
Capital One's Q4 2024 P/E ratio of 15.39x is relatively moderate compared to historical levels, showing an upward trend from 11.66x in Q1 2024. The EV/EBITDA ratio has increased to 15.54x from 11.22x, suggesting expanding valuation multiples.
Growth & Profitability
The company demonstrated solid revenue growth, with Q4 2024 revenue reaching $9.79 billion, up from $9.05 billion in Q1 2024. However, net income showed volatility, declining to $1.02 billion in Q4 from $1.69 billion in Q3 2024.
Analyst Sentiment
Recent analyst actions are predominantly positive. UBS upgraded COF to Strong Buy with a $235 price target, citing increased likelihood of successful Discover merger. Multiple analysts have raised their price targets, with targets ranging from $200-$235, suggesting 9-30% upside potential.
Technical Analysis
The stock has shown strong momentum, gaining 29.5% over the past three months and outperforming the broader market. This performance is supported by improving credit conditions and positive sentiment around the pending Discover acquisition.
Conclusion
At current levels, COF is not overvalued given its strong fundamentals, strategic growth initiatives through the Discover merger, and positive analyst outlook. The valuation metrics remain reasonable relative to growth prospects and industry peers.