Here I am going to make an attempt to value Citigroup Inc, the New York based global bank.
Currently, Citigroup is valued by the public markets at 164 billion USD. Is Citigroup fairly valued?
No. I think Citigroup is undervalued by circa 20% in current market conditions. Relative to its US peers JPMorgan Chase, Wells Fargo and Bank of America, Citigroup's Price-to-Book ratio at 0.93 is either at twice or at least with 40% discount.
Yes, Citigroup undertook huge restructuring after the 2008 Great Recession and in 2017 Citigroup recorded a loss of 8.048 billion USD. But in 2018 Citigroup recorded 16.672 billion USD in profit and Citigroup currently trades at 9.82 Price/Earnings multiple. At its current valuation Citigroup is a classical value stock. One explanation for the low market multiples of Citigroup may be that its revenue grew only slightly since 2016 full year and as of 2018 Citigroup's revenue is still significantly below its full year 2015 level.
So, in short, Citigroup, in my humble opinion, should be valued at around 200 billion USD by public markets to reflect its real intrinsic value. One contrary view is that a new recession is coming. And yes, global banks will suffer as their nonperforming loans will increase and they will start making write offs. But, still, Citigroup is in a good position to weather the coming storm and Citigroup's stock should outperform its US and global banking conglomerates peers if a new economic recession comes soon.
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Petar
Vladimirov Posledovich is not liable for any investment losses incurred
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Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!
Respectfully yours,
Petar Posledovich
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