Does Citigroup's Stock Deserve a Deeper Look?

Over the past 12 months, shares of Citigroup (NYSE: C  ) have handily outperformed both its peers on the KBW Bank Index and the broader market's S&P 500. Their total return of 68% beats the former by roughly 30 percentage points and the latter by 48 percentage points. But while this performance is outstanding, it forces current and prospective investors to question whether the nation's third largest bank by assets can keep it up going forward.

C Total Return Price Chart

According to the collective insight of banking analysts, the answer to this question is yes. The median target price of the 25 analysts surveyed by S&P Capital IQ is $61 a share, with a high estimate of $68.50 and a low of $36. As of the time of writing, Citigroup actually trades for approximately $50 per share. Consequently, if the analysts are to be believed, which is admittedly a big "if," then there's an anticipated upside of 22%.



KBW Bank Index

Price-to-Tangible Book Value



Price-to-Book Value



Price-to-Earnings Ratio



Source S&P Capital IQ.

In this case, Citigroup's valuation lends credibility to the potential for future appreciation. At present, shares of the bank trade for 0.94 times tangible book value and 0.79 times book value. Those figures are 49% and 37% less, respectively, than the 24-member KBW Bank Index, of which Citigroup is a member. The one exception in this regard is its price-to-earnings ratio of 15.7, which is roughly 3% higher than its peers though 12% below that of the average stock on the S&P 500.

At the end of the day, this is a quick and rudimentary analysis that shouldn't be relied upon singularly when deciding whether to buy or sell shares of Citigroup. What it shows us instead is that a deeper look at the megabank's shares may very well be in order, given the potential for future gains.

Bargains of a lifetime are still available in bank stocks, but it's critical to understand what makes the best banks tick. The Motley Fool's new report "Finding the Next Bank Stock Home Run" demystifies the perils of investing in banks and reveals how savvy investors can win. It's completely free -- click here to get started.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2610316, ~/Articles/ArticleHandler.aspx, 10/1/2016 5:13:26 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 19 hours ago Sponsored by:
DOW 18,308.15 164.70 0.91%
S&P 500 2,168.27 17.14 0.80%
NASD 5,312.00 42.85 0.81%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/30/2016 4:00 PM
C $47.23 Up +1.43 +3.12%
Citigroup CAPS Rating: ***