Is Capital One Financial Corp. overvalued or undervalued?

As of 20 May 2025, Capital One Financial Corp. has moved from a fair to a very expensive valuation grade. The company is currently overvalued, with a P/E ratio of 40, significantly higher than its peers such as JPMorgan Chase & Co. at 17.62 and Bank of America Corp. at 11.83. Additionally, the Price to Book Value stands at 3.00, while the EV to EBIT ratio is exceptionally high at 78.13, indicating a premium that may not be justified by its earnings potential.
In comparison to its peers, Capital One's ROE of 7.55% and ROCE of 4.37% do not support its high valuation, especially when contrasted with Citigroup, which boasts a more attractive valuation and a lower P/E ratio of 16.99. The company's recent stock performance has outpaced the S&P 500, with a year-to-date return of 13.08% compared to the S&P 500's 2.44%, but this does not mitigate the concerns regarding its current valuation metrics.