– Citi neither has a ton of knockout risk nor is materially over-earning on 2022 estimates.
– Is far too cheap on trailing and forward earnings (4.7x – 6.4x) and tangible BV (0.55x).
– Fed’s severally adverse scenario is fully manageable by equity cushion (23% downside) and seems overly punitive – scenario projects $80bn of losses or equivalent to 4 years of GFC losses.
– The bank is in much better shape than pre-GFC.
Valuation: Trades at 55% of TBV vs a 10-year historic average of 0.88xTBV. At 4.7x trailing, 4.2x 2021, and 6.4x consensus 2022 earnings.
Exp. gain: Not specified.
Full $C write-up (free guest account required):