C
Citigroup Inc.
$128.07
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 66.6% above fair value
You pay
$128.07
Bear
$53.82
Fair
$76.89
Bull
$99.96
Bear
$53.82
-58.0%
ROTCE 5.7% → 0.30x TBV
Fair
$76.89
-40.0%
ROTCE 7.6% → 0.56x TBV
Bull
$99.96
-22.0%
ROTCE 8.7% → 0.73x TBV
Adjust Assumptions
7.6%
10.4%
Key Value Driver
ROTCE (7.6%) vs. cost of equity (10.4%)
Implied Market Multiple
1.14x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (27 analysts)
$151.08
Divergence from AlphaVal
49%
Summary
With ROTCE of 7.6% vs. 10.4% cost of equity, fair P/TBV is 0.56x on $112.62 tangible book, implying $76.89 per share. DDM cross-check: $39.41.
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 (10.4%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $39.41 (49% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $151.08 (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