Citigroup

C Chart C data by YCharts

Citigroup ( C) trades at a lower valuation than any other U.S bank to its consensus 2015 earnings estimate. The shares closed at $53 Friday, returning 34% this year, following a 51% return during 2012. Citi trades for 8.6 times the 2015 EPS estimate of $6.15. The consensus 2014 EPS estimate is $5.57.

It isn't a surprise to see Citigroup at the top of this list, considering the drag on stock valuations for "too big to fail" banks, in the continually uncertain political and regulatory environment. But there's no denying that the company has made quite a bit of progress in its strategy of selling off or winding down non-core assets, in order to boost its capital strength and trim expenses.

Citigroup on July 15 reported second-quarter earnings of $4.2 billion, or $1.34 a share, increasing from $3.8 billion, or $1.23 a share, in the first quarter, and $2.9 billion, or 95 cents a share, during the second quarter of 2012.

Excluding credit valuation adjustments (CVA) and debit valuation adjustments (DVA), earnings were $3.9 billion, or $1.25 a share, declining from $4.0 billion, or $1.29 a share the previous quarter. Operating earnings were up 25% from $3.1 billion, or $1.00 a share, during the second quarter of 2012, excluding CVA/DVA and also excluding a loss during the second quarter of 2012 tied to the sale of the company's stake in Akbank.

Again excluding CVA/DVA, Citi's total second-quarter revenue was $20.0 billion, up 8% year-over-year.

Atlantic Equities analyst Richard Staite in a note following the earnings release wrote, "The results compared favorably against JPM with tangible book value per share increasing by 1.4% to $53.10 and the Basel III ratio improving to 10.0%," following the Federal Reserve's announcement of its final capital rules.

Citigroup's estimated Basel III Tier 1 common equity ratio of 10.0% puts the company in full compliance with the Federal Reserve's minimum requirement of 7.0% plus an additional 2.5% buffer as a global systemically important financial institution (GSIFI), years ahead of the January 9.5% several years ahead of the January 2019 due date.

Citigroup also estimated that its Basel III supplementary Tier 1 leverage ratio was 4.9% as of June 30, putting it close to full compliance with federal regulators' new minimum requirement of 5% for holding companies, ahead of a January 2018 deadline. Citi estimated its main banking subsidiary was already in compliance with a 6% Basel III supplementary Tier 1 leverage ratio minimum requirement.

When comparing Citi's results against JPMorgan Chase's results, Staite emphasized a second-quarter net interest margin of 2.82%, which was down from 2.95% the previous quarter. JPMorgan's second-quarter net interest margin was 2.20%, falling from 2.37% the previous quarter.

Continuing the comparisons with JPMorgan, Staite pointed out that Citi's banking and securities revenues were up 21% year-over-year, even better than a solid 16% increase for JPMorgan.

Staite rates Citigroup "overweight" with a price target of $59.

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

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

If you liked this article you might like

How to Get Rich Using Warren Buffett's Favorite Stock Market Indicators

How to Live Just Like Billionaire Warren Buffett

Why Hurricanes Won't Force the Fed to Ditch a December Rate Hike

How to Make a Deal Like Billionaire Investor Warren Buffett

How to Invest Like Billionaire Warren Buffett