According to Bloomberg, the government could announce as early as next month a program to sell down its 27% stake in Citigroup (NYSE: C). The timing looks relatively favorable: Citi has been the fourth-best performing stock in the S&P 500 this month, up 27% through March 26. Should investors get on board by purchasing the shares now?

Let's take a look at how Citi stacks up with respect to six of its global peers in terms of valuation:


P/E (2011 EPS)

P/E (2012 EPS)




Wells Fargo (NYSE: WFC)



JPMorgan Chase (NYSE: JPM)



Bank of America (NYSE: BAC)






Barclays (NYSE: BCS)



Deutsche Bank (NYSE: DB)



Source: Capital IQ, a division of Standard & Poor's.

Most expensive or next-to-cheapest?
The table shows that Citi shares are the most expensive on the basis of next year's estimated earnings per share (EPS), but next to the cheapest on the basis of estimated 2012 EPS. In that respect, they may offer an opportunity.

A long-dated bet
Indeed, the average holding period for a New York Stock Exchange stock is less than one year; most current Citi shareholders won't be around to care whether 2012 earnings estimates pan out. However, if Citi can achieve or beat its EPS estimate, the shares may end up looking relatively attractive. Still, it's hardly a slam-dunk: The range of the group's P/Es based on 2012 EPS estimates is pretty narrow. It seems to me that in order to make this bet, you should really be expecting the bank to top the consensus EPS estimate.

Furthermore, a lot can happen between now and 2012 -- you can drive a government bailout program through the range of possible outcomes around that estimate.

Two safer bets
Is there an opportunity here? Possibly -- for professional investors with a variant perception and a longer-than-average time horizon. For individual investors, Wells Fargo and JPMorgan Chase, which sport similar valuations to Citi, look like safer bets.

Between high valuations and slow growth, investors should expect disappointing returns from U.S. stocks over the next several years. Tim Hanson explains how to make more in 2010.

Fool contributor Alex Dumortier has no beneficial interest in any of the stocks mentioned in this article. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.