This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

10 Most Profitable Banks Trading Below Book Value

4. Citigroup
Shares of Citigroup (C - Get Report) closed at $34.06 Monday, returning 30% year-to-date, after a decline of 44% during 2011.

The shares trade for 0.7 times their reported June 30 tangible book value of $51.81, and for six times the consensus 2013 EPS estimate of $5.65. The consensus 2012 EPS estimate is $5.06.

For the 12-month period ended June 30, Citi's ROA was 0.55%, and its ROE was 5.78%.

Citigroup announced on Sept. 11 that it would record a pretax write-down in the third quarter of $4.7 billion -- $2.9 billion after tax -- after the company and Morgan Stanley agreed upon a valuation for the Morgan Stanley Smith Barney joint venture, which was formed in June 2009.

Citigroup in June 2009 sold Smith Barney to the joint venture, booking a gain of $11.1 billion, or $6.7 billion after taxes. Morgan Stanley had the option of purchasing Citigroup's minority stake in the joint venture over a three year period, beginning this year.

Morgan Stanley in June informed Citigroup that it would purchase an additional 14% stake in the joint venture from Citigroup, after which the companies took over three months to arrive at the joint venture's valuation. The two companies announced that week that Morgan Stanley would buy Citigroup's entire stake, taking another 15% by June 1, 2013, and the remainder by June 1, 2015.

Kotowski on Sunday called Citigroup "the hands down winner in terms of attractiveness" on the basis of a valuation to tangible book value "at only 27% of its historical average." The analyst said that "at least "$100 billion of the $191 billion of assets in Citi Holdings are home mortgages," along with $35 billion in Citi's runoff subsidiary of which "a decent chunk is also housing related," which is "is the single biggest reason for the largest discount to tangible book value in the group is the area that the market is telling us is improving most rapidly."

This makes Citi, ironically, a housing recovery play.

Kotowski rates Citigroup "Outperform," with s $53 price target, implying 56% upside for the shares, from Monday's close.

C Chart C data by YCharts

Interested in more on Citigroup? See TheStreet Ratings' report card for this stock.

8 of 11

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
BAC $15.41 -0.71%
C $51.52 -0.23%
ETFC $28.56 1.12%
KEY $14.16 -0.28%
USB $43.67 -0.27%


DOW 17,776.12 -200.19 -1.11%
S&P 500 2,067.89 -18.35 -0.88%
NASDAQ 4,900.8850 -46.5560 -0.94%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs