Given that all banks perform the same basic functions under the same basic guidelines, it's easy to assume all banking stocks are more or less the same and sport comparable valuations. That's not quite the case. One bank in particular has been a decided laggard of late, underperforming its peers. Indeed, it's been such a poor performer just since June that its price-to-earnings ratios -- past and projected -- have reached strangely low levels.

That bank? Citigroup (C 1.22%). You can step into it right now while the stock is trading at a dirt-cheap forward-looking price-to-earnings ratio of 9, with a dividend yield of 2.9% that is well above its peers' average. And, if you're truly investing for the long term, you should do just that.

Not yesteryear's lethargic Citi

Banking stocks may all look the same on the surface, but the market clearly doesn't see them the same. Since the end of May, while shares of rival banks like Bank of America, Wells Fargo, and JPMorgan Chase have logged gains of 11%, 7%, and 4%, respectively, Citigroup's stock is down almost 11%. That's more disparity than can be chalked up to mere market randomness.

An investor reviewing a value/cost chart.

Image source: Getty Images.

The reason for Citi's pronounced weakness is a combination of factors, including a relatively new CEO, a historically below-average return on common equity, and nonexistent revenue growth since coming out of 2008's subprime mortgage meltdown and subsequent recession. Next year's projected top-line growth of 1% following this year's likely 4% revenue tumble isn't exactly thrilling, either.

Think bigger picture, though. Specifically, think further down the road to 2023 and beyond, once new chief executive Jane Fraser has had a chance to effect some changes in an environment that isn't crimped by the coronavirus.

The graphic below puts things in perspective. The analyst community is calling for just so-so sales growth of 1% this year, but that's to be followed by nearly 5% top-line growth in 2023 as the dust of the pandemic settles and Fraser's revitalization efforts begin to take hold. That year's projected per-share profits of $8.83 also mark forward progress, after stripping out the wild impact of loan-loss provisions (and then retractions of those provisions) linked to COVID-19 this year and last year.

Citigroup's revenue and earnings growth should be rekindled in 2022 and grow through 2023.

Data source: Thomson Reuters. Chart by author.

While analysts' consensus estimates should always be taken with a grain of salt -- they're just guesses, after all -- they're also highly educated guesses. And in this case, they're rooted in changes that are plainly happening.

Take, for example, the bank's most recent update of its Treasury and Trade Solutions platform. Unveiled on Monday, the service now offers a flexible real-time billing and payment option for Citigroup's institutional and consumer customers. It's the first such internal end-to-end solution offered in the U.S., but more than that, it turns what used to be something of a liability into an advantage. The company's outsized exposure to consumer credit cards and its strong international institutional presence are undermined by its tepid stake in the consumer checking market and untapped opportunities in wealth management. More relevant technologies like the aforementioned upgrade to its Treasury and Trade Solutions platform have also helped Citi strengthen relationships with retail customers. At the same time, the megabank is also (finally) shedding retail/consumer operations overseas that never quite fit, and never will.

The biggest change is, rather than operating independently the company is now moving as one well-thought-out enterprise. As the pieces of this complex puzzle are put in their proper place, don't be surprised to see 2023's projected sales and earnings growth repeated or even accelerated in 2024 and beyond.

Look forward, not backward

By and large most investors either don't see the looming overhaul, don't believe in it, or both.

And who could blame them? This is a company that has choked on a bloated balance sheet thanks to years of acquisitions that were arguably savvy, but not cheap. They were also not knitted into the company's operation to make it the well-oiled, effective machine Fraser appears to be envisioning today.

Given this history of lackluster results, the stock's tepid performance since June (and for that matter, its poor performance for the past few years) makes sense. An inexpensive stock isn't a buy simply because it's inexpensive. The company must be one worth owning. While Citigroup's performance has not been disastrous, there have been better options from within the banking sector for several years now.

Don't be so fixated on history, however, that you overlook the distinct possibility that Citigroup's probable future looks different than its recent past. Fraser has a healthy vision and a workable plan. Even merely modest growth from here stands to drive market-leading gains for this stock that's valued markedly lower than any of its peers.