Is Citigroup A Good Bank Stock for 2013?

Wells Fargo & Company (NYSE:WFC) and HSBC Holdings plc (NYSE:HBC), meanwhile, are valued at premiums to book value at P/B ratios of 1.3 and 1.2 respectively. In the case of Wells Fargo, this makes sense as that bank makes very good use of its assets; when we look at earnings, the forward P/E is only 10 and we think that the bank can easily justify its valuation. We certainly think that it’s worth paying more to own Wells Fargo than Citigroup. HSBC’s recent financial performance and P/E multiples look quite a bit like Citi’s, and we’re not sure why its assets merit such a high valuation. We think it should be avoided as well.

Citigroup seems like it could be a good value investment, but we’d advise potential buyers to at least look at JPMorgan Chase and Wells Fargo first. JPMorgan Chase is priced competitively, but we think it’s in a much better business position than Citi; Wells Fargo’s assets are expensive but the gap narrows considerably when we look at earnings and the bank’s safer reputation justifies its premium to Citigroup.