C
Citigroup Inc.
$129.37
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 35.6% above fair value
You pay
$129.37
Bear
$66.79
Fair
$95.42
Bull
$124.05
Bear
$66.79
-48.4%
ROTCE 5.7% → 0.30x TBV
Fair
$95.42
-26.2%
ROTCE 7.6% → 0.56x TBV
Bull
$124.05
-4.1%
ROTCE 8.7% → 0.74x TBV
Key Value Driver
ROTCE (7.6%) vs. cost of equity (10.3%)
Implied Market Multiple
1.17x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $151.00 from 27 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $95.42 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Return on equity (7.6%) is below the minimum investors require (10.3%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $35.35 (54% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $151.00 (from 27 analysts). Our estimate is 49% below the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly