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Capital One Financial (COF) — WACC Analysis

WACC Breakdown

Capital One Financial (COF) has a weighted average cost of capital (WACC) of 13.5%. The cost of equity is 9.0%, derived from a beta of 1.00 and a risk-free rate of 4.7%. The after-tax cost of debt is 25.1%. The capital structure is 71.8% equity and 28.2% debt.

Interpretation

A WACC of 13.5% indicates that the market perceives Capital One Financial as higher-risk, requiring a greater return to compensate investors.

Investors can compare COF's WACC of 13.5% against industry peers to gauge its relative financing costs. A beta of 1.00 reflects the stock's volatility relative to the broader market.

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VALUATION

COF WACC: 13.51% for Capital One Financial

Current inputs imply a 8.96% cost of equity and a 31.80% pre-tax cost of debt. Use this discount rate as a starting point for DCF validation.

[01]Current Market Data
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[02]
WACC Calculation Process
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Market Data Loaded
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Company Data Fetched
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Beta Calculated (5Y)
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Inputs Auto-Populated
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WACC Calculated
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Step 2: Enter Ticker Symbol
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Step 4: Review Auto-Populated WACC Inputs

Values are automatically populated from real data. You can adjust them manually if needed.

4.30%
1.000
4.23%
5.00%
21.00%
70.00%
Debt: 30.00%Equity: 70.00%

Please enter a valid company ticker to calculate WACC

Capital One Financial Common Stock (COF) WACC Results
Weighted Average Cost of Capital
13.51%
Cost of Equity
8.96%
Risk-Free Rate4.73%
Beta1.00
Market Risk Premium4.23%
Cost of Debt
25.12%
Pre-Tax Cost of Debt31.80%
Tax Rate21.00%
Tax Shield6.68%
Capital Structure
Equity: 71.83%($132.31B)
Debt: 28.17%($51.89B)
Equity Component
6.44%
71.83% × 8.96%
Debt Component
7.08%
28.17% × 25.12%

Capital One Financial (COF) WACC in context

Capital One Financial (COF) currently screens with an estimated WACC of 13.51%. That blends a 8.96% cost of equity, a 31.80% pre-tax cost of debt, and a 71.83% equity weight into the discount rate you would typically use in a DCF model.

screens as a relatively high discount rate, which makes valuation more sensitive to execution and capital structure risk.

What COF WACC implies

A 13.51% discount rate screens as a relatively high discount rate, which makes valuation more sensitive to execution and capital structure risk.

How this page calculates COF

This page combines CAPM-based cost of equity with SEC-derived debt and capital structure inputs. The current beta is 1.00 and equity accounts for 71.83% of capital.

What to do next

Validate business quality on the company page, then carry the same discount-rate assumptions into the DCF page to test fair value sensitivity.

Disclaimer: This is not financial advice. Data sourced from SEC EDGAR and Polygon.io. Past performance does not guarantee future results. Always conduct your own research before making investment decisions.