Citigroup: Cheap For A Reason?
Citigroup (NYSE:C), the American multinational banking and financial services giant, recently reported solid second quarter results on July 14th. Over the past few weeks, the company’s stock price has gained 5.97% (July 10th – July 28th). However, this recent surge is far from the norm. Citigroup has struggled to keep up with its competition since the start of the year, as seen in the figure 1.
Below, I have conducted a SWOT analysis, noting the strengths and weaknesses of Citigroup, as well as the opportunities and challenges that lie ahead. In addition to this analysis of Citigroup, recent articles on JP Morgan (NYSE:JPM) and Bank of America (NYSE:BAC) can also be found on our author page.
Strengths
One of Citigroup’s greatest strengths is its low Price/Book ratio of 0.74, meaning that the bank’s stock is currently valued at 73% of the total value of the company’s assets. Citigroup is the only big bank to trade below its tangible book value. This demonstrates that the market is bearish on Citigroup, which could lead to some massive growth with the right catalyst.
The bank’s low P/E ratio of 11.06 further supports this conclusion. This figure is significantly lower than Citigroup’s competitors, with Bank of America and JP Morgan posting 19.45 and 13.99, respectively. While Citigroup no doubt has its issues, the current stock prices make the bank an attractive buy.
The bank’s second quarter earnings were a step in the right direction, with adjusted earnings up 1% to 3.93 billion, or $1.24 per share. Analysts had expected adjusted earnings of $1.05 per share, making it a big beat for the bank on that metric.
