James Dennin, Kapitall: When Citigroup failed its Fed stress test, banking shares were stressed out. The rejection of Citigroup’s (C) capital plan not only surprised Citi’s executives but also hurt shareholders. With shares down nearly 10% in the quarter, should a lack of a dividend raise or share buyback deter investors? The Federal Reserve said the capital plan “reflected a number of deficiencies in its capital planning practices, including in some areas that had been previously identified by supervisors as requiring attention, but for which there was not sufficient improvement.” The Fed wanted to see improvements in such things as Citi’s stress tests. Read more analysis from Kapitall on Citigroup. Investors will not see the dividend increase to five cents or a $4 billion share buyback. Despite the setback, investors should not assume Citi’s capital is in any trouble. If anything, Citi will need to revamp its capital controls so that it is ready for any stocks in the market. Citi shares could revisit yearly lows, but its shares are already valued at the lowest in terms of price of profit (POP). Only JPMorgan Chase (JPM) is valued comparably with Citi, with a POP of 10. Unsurprisingly, Citi shares were downgraded by some firms. Bernstein and KBW both downgraded Citi shares after the capital plan was rejected. Citi now has a price to book ratio of 0.7 times and a P/E of 10.7. Its book value per share is $65.26. Citi is underperforming compared to Bank of America (BAC) and JPMorgan Chase. On the other hand, investors looking for exposure to the financial services market might find Citi a compelling rebound play.