JPMorgan Vs. Citigroup Earnings: Which Is the Cheaper, Better Longer-Term Play?

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Citigroup Inc Notícia

Jpmorgan Chase & Co

Stocks Analysis by Brian Gilmartin covering: Citigroup Inc, JPMorgan Chase & Co. Read Brian Gilmartin's latest article on Investing.com

written late last week on what was expected for the two banking giants Friday morning, July 12th, ’24, neither offered any real surprises. At one point, in the earnings preview, it was written that ” if there were two opposites in the large-cap, money-center bank universe, it was Citigroup or what is now the ROTCE , which for Citigroup is high single digits, but for JPMorgan, is in the low 20% today.

Morningstar assigns a “fair value” to JPM’s stock at $168, while my own valuation model has a fair value estimate of $239, which can be volatile each quarter, so looking at a 4-quarter average for JPM, the model valuation estimate is $212. Citi is a much better value play than JPM at this point, given Citi trades at 0.66x book value of $99.70 and 0.75x tangible book value of $87.53.

The speed at which Citi gets there is dependent on Jane Fraser’s continue expense reductions – Morningstar noted after the quarter that “continued expense diligence will be necessary for the turnaround to succeed” – which I thought was a perfect way to express the current state of affairs.

 

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