Shares of Citigroup trade for 0.7 times tangible book value, and for 8.4 times the consensus 2013 EPS estimate of $4.65. The consensus 2014 EPS estimate is $5.14.
Citigroup has come a long way during 2012, with the company's estimated Basel III Tier 1 common equity ratio increasing to 8.6% as of Sept. 30, from 7.2% six months earlier.
Former CEO Vikram Pandit's long-term "good bank/bad bank" strategy of placing non-core assets in the Citi Holdings subsidiary and then selling them or allowing them to run-off has trimmed the company's balance sheet, while also reducing expenses. This strategy is being accelerated by new CEO Michael Corbat.
The company on Dec. 5
a series of moves meant to cut its annual expenses by $900 million in 2013, with total expense savings increasing to $1.1 billion in 2014. The cuts included 84 branches and 111,000 layoffs, with the company estimating that its annual revenue would decline by only $300 million.
Citigroup currently pays a nominal quarterly dividend of a penny a share. The company's initial 2012 capital plan included a dividend increase and share buybacks, but was rejected by the Federal Reserve. A revised capital plan was approved in August, but included no request for any increased capital return to shareholders.
Marty Mosby of Guggenheim Securities estimates that Citigroup had $14.9 billion in excess capital as of Sept. 30, and estimates that following the next round of stress tests, the company will receive Fed approval to raise the dividend to 25 cents a share, with the company holding off on share buybacks for another year.
Mosby rates Citigroup a "Buy," with a $50 price target, and estimates the company will earn $4.85 a share in 2013, with EPS rising to $5.55 in 2014.
Interested in more on Citigroup? See TheStreet Ratings' report card for this stock.