Based on the aggregated intelligence of 120,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, banking behemoth Citigroup (NYSE:C) has received a distressing two-star ranking. While one-star stocks have been the worst performers, our data has shown that two-star stocks still lag the market by a significant margin and should be approached with caution; conversely, highly-rated stocks have outperformed the S&P.

With that in mind, let's take a closer look at Citigroup's business, and see what CAPS investors are saying about the stock right now.

Citigroup facts

Headquarters (founded)

New York, N.Y. (1812)

Market Cap

$40.65 billion


Financial services

TTM Revenue

$27.41 billion


CEO Vikram Pandit
CFO Gary Crittenden

Return on Equity (Average, Past Five Years and TTM)

10.3% and (16.1%)


Bank of America (NYSE:BAC)
JPMorgan Chase (NYSE:JPM)

CAPS members bearish on C also bearish on

Merrill Lynch (NYSE:MER)
Wachovia (NYSE:WB)

CAPS members bullish on C also bullish on

General Electric (NYSE:GE)
Johnson & Johnson (NYSE:JNJ)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, fully 543 of the 1,337 All-Star members who have rated Citigroup -- some 41% -- believe the stock will underperform the S&P 500 going forward. These bears include BSHumphreyII and rd80, both of whom are ranked in the top 20% of our community.

Last week, BSHumphreyII brought the obvious red flag to our community's attention: "Having to come back to the government trough for seconds is not a good sign. Think they'll get a third bite at the apple?"

In a pitch from two weeks ago, rd80 took an in-depth look at the Citi bailout, and reached the same bearish conclusion. Below is a small excerpt, but be sure to check out the entire pitch:

From a taxpayer perspective, the deal isn’t bad, but isn’t as good as it could have been. If Citi survives, the 8% coupon on the preferred is a pretty good return and the warrants give some upside if the stock price gets up into double digits. I think the 80% dilution in previous bailouts was excessive, but I would have liked to see a much lower strike price for our warrants in this deal. ...

This plan takes a zero stock price off the table, but about the best that can be said for it from a shareholder perspective is it’s better than the alternative. The 8% payout on the preferred is a substantial expense for a company that isn’t making money.

What do you think about Citigroup, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 120,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.