C
Citigroup Inc.
$125.09
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 34.8% above fair value
You pay
$125.09
Bear
$64.95
Fair
$92.79
Bull
$120.63
Bear
$64.95
-48.1%
ROTCE 5.7% → 0.30x TBV
Fair
$92.79
-25.8%
ROTCE 7.6% → 0.55x TBV
Bull
$120.63
-3.6%
ROTCE 8.7% → 0.72x TBV
Key Value Driver
ROTCE (7.6%) vs. cost of equity (10.5%)
Implied Market Multiple
1.14x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $140.50 from 27 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $92.79 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 (10.5%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $34.54 (55% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $140.50 (from 27 analysts). Our estimate is 45% 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