Capital One scores 56 for management and 78 for moat. The management score rests on a return on invested capital of 1.1% and a gross margin of 47.3% — figures that describe returns closer to the cost of the capital behind them. Debt sits at 0.45x equity. The solid moat and mixed management are not the same judgement, and the gap between them is where the argument about this business sits.
The price anchors are built on deliberately conservative assumptions. Growth is modelled at 15.0% a year, below the 17.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 30.0x. That produces an intrinsic value of $484.80, a 10-CAP price of $497.97 and a payback time price of $786.09, with the value zone set at the highest of the three, $786.09. Today's price of $194.48 sits inside that zone.
The price sits inside the value zone, but the business scores 78 for moat and 56 for management. Cheap and good are different tests, and only one of them is passed here.
| Price | $194.48 |
| Market cap | $119.3B |
| P/E ratio | 12.0x |
| Return on invested capital | 1.1% |
| Gross margin | 47.3% |
| Debt to equity | 0.45x |
| Free cash flow yield | 19.9% |
| Growth rate used | 15.0% |
| Growth rate measured | 17.0% |
| Exit multiple assumed | 30.0x |
| Company | Moat | Buy price |
| PayPal Holdings (PYPL) | 66 | $91.87 |
| American Express (AXP) | 86 | $374.36 |
| Affirm Holdings Inc (AFRM) | 88 | $48.05 |
| Synchrony Financial (SYF) | 74 | $337.98 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Capital One rather than accepting ours.