Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Capital One Financial Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -8.2% to 21.3% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 18, DPO 12, DIO 60). At a 9.7% WACC with mid-year discounting, the terminal value (80% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 15.0x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $901.15 per share, suggesting COF is undervalued by 395.4% at the current price of $181.91.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 8,868 | 9,327 | 9,869 | 11,967 | 14,510 | 14,873 |
| (−) Net Interest | 14,358 | 15,102 | 15,979 | 19,376 | 23,495 | 24,083 |
| (+) D&A | 1,075 | 1,217 | 1,326 | 1,447 | 1,586 | 1,626 |
| EBITDA | 24,301 | 25,645 | 27,174 | 32,790 | 39,592 | 40,581 |
| (−) Tax | 1,299 | 1,366 | 1,446 | 1,753 | 2,126 | — |
| (−) CapEx | 1,407 | 1,480 | 1,566 | 1,899 | 2,303 | — |
| (−) ΔWC | 3,389 | 312 | 369 | 1,428 | 1,732 | — |
| Free Cash Flow (FCF) | 18,206 | 22,486 | 23,794 | 27,710 | 33,432 | — |
| Peers' EBITDA Multiple | 15.0x | |||||
| Terminal Value | 609,533 | |||||
| WACC / Discount Rate | 9.71% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 17,382 | 19,567 | 18,872 | 20,032 | 22,029 | 383,436 |
| Enterprise Value | 481,316 | |||||
| Projection Period | 97,881 | 20.3% | ||||
| Terminal Value | 383,436 | 79.7% | ||||
| (−) Current Net Debt | (6,434) | |||||
| Equity Value | 487,750 | |||||
| (÷) Outstanding Shares | 541M | |||||
| Fair Price | $901 | +395.3% | ||||
| WACC \ EV/EBITDA Exit Multiple | 11.0x | 13.0x | 15.0x | 17.0x | 19.0x |
|---|---|---|---|---|---|
| 7.7% | $772 | $875 | $978 | $1082 | $1185 |
| 8.7% | $741 | $840 | $939 | $1037 | $1136 |
| 9.7% | $713 | $807 | $901 | $995 | $1090 |
| 10.7% | $685 | $775 | $866 | $956 | $1046 |
| 11.7% | $659 | $746 | $832 | $918 | $1004 |
Current price: $181.91. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.