Citigroup (C) Stock | Long Term Analysis | Overvalued or Undervalued |

Alright hello and welcome everybody to another stock analysis video where today we’re talking about citigroup ticker symbol C now this company is trading on the new york stock exchange and this is one of the most successful banks that have existed here in america and also we’ve had other companies that we talked about like this company such as bank of america we made also a video about city group in the past and so i want to kind of make a new video on this company to essentially go into how this company makes money how this company also is able to at least profit and grow in the long term and also be able to show and demonstrate whether the company is currently overvalued or undervalued and i also want to give you a long-term announcement on this company so you decide for yourself whether or not you’d be interested investing in this company and holding your investment for quite some time anyway if you like this video please do like and subscribe if there’s about a channel it let’s get this contact to more people so that more people can understand how city group works and also that the stocks that we talk about work as well on our channel anyway thank you so much for watching without further ado let’s get started

now here’s how sage group works essentially what they do is they’re a financial service company or they’re also a financial holding company so what they can do is they may invest in the stock market they’ll take assets that they have maybe they’ll take some money market accounts they’ll take maybe money from you know when people have bank accounts with them they can use that money reinvest it in the stock market try to figure out exactly what they want to do they may buy out other banks they may do other things like that so they do a lot of investing they also offer financial services to people who would need them so maybe if you’re interested in trying to figure out how to invest maybe how to figure out how you want to get into a 401k xera cgroup will essentially be able to set a financial advisor up with you and they will be able to help you with that so cgroup offers a lot of financial services this company also is able to do very well in terms of just banking in general as they offer law of loans they can make a lot of money off of that so of course the money that they take in from banking they can then re issue that money out to people who are interested alone and they also give people loans in terms of using a credit card when people use credit cards from citigroup and this is something that they make a lot of money from they’re able to officially make money off of the credit card that you are spending with because they could charge a fee when you’re using the credit card to the person that you’re using the credit card with so what happens is essentially when you take a c group credit card or any credit card for that matter when you’re spending money and using that credit card at let’s say microsoft and what would happen is if you were to use that credit card with microsoft then that would mean that microsoft would have to pay a specific fee to citigroup and so you would get your cash back from c group a little bit because they can pay you back and they won’t encourage you to use their credit card then cigroup makes a lot of money off of this as well they also make a fortune off of the loans that they offer on their credit cards too when people struggle to pay back their credit cards and they have credit card debt this is what c group can make a lot money on this is also a big way of why a lot of companies a lot of financial service companies make a fortune you know this goes for discover this goes for bank of america and also really other large banks not just in america but also internationally so this is very important and i want to note that this is a way that cgroup can make a lot of money just in the long term now currently this company has an intrinsic value of about 152 dollars a share and that means that the company should trade towards generally 152 a share this is just one way of calculating the intrinsic value there’s many ways this is the projected free cash flow model of calculating the intrinsic value and here i want to show you exactly how we calculate this of course when a company is trading near the intrinsic value that would suggest that the company’s fair value when it trades above the intrinsic value that suggests that the company is overvalued and if the company is trading below 150 a share or whatever the intrinsic value is for the company that you’re looking at that would suggest that the company is undervalued now like i said there’s many ways of tackling this but this is the projected free cash flow mall we consider that how that’s calculated is by taking a growth multiple which is simply speculation of how fast the company’s earnings are going to grow each year we see that it’s currently at about 11. normally it’s at about 9.5 i would say that’s more the average for the growth multiple for companies and so as the growth multiple may increase or the growth multiples higher for this company compared to other companies this is because maybe the company is expected to be growing at a faster rate for us we expect this to happen because just for the fact that this company is willing to take on a little bit larger uh risk in terms of investing this company does do very well with investing and we’ve seen that the company has been very profitable recently which we’ll talk about in a moment but this company has been able to withstand the pandemic quite a bit and this also is reflected in their trading value now we have to understand as well that you multiply that but the free cash flow which is a six year average now i just want to continue here we add the total stock exactly which is simply the assets minus the debt of the company multiply that by 0.8 and divide that by the shares it’s saying in the market in order to get the intrinsic value per share of the company now just so you know you can rewatch this part try to figure out exactly what we do growth multiple multiply that by the free cash flow six year average add the total stock loss equity multiply that by 0.8 offsets the growth multiple divided by the shares that’s staying in the market in order to get the intrinsic value this works for many companies as well there’s also so many ways to calculate the intrinsic diet of the company so please do make sure that you look at other ways and not just this way now consider the company has a book value of about 88 a share and that is because the company has a relatively high asset worth compared to the trading value of the stock we consider that with the company having a book value of about 80 a share compared to the current trading price of the stock which is about 70 dollars a share like i said before this would suggest the company is currently trading well below its asset value now because of this there was would mean that the company should really grow to a dollar a share at least this is despite the fact that the company is profiting substantially and the price earnings is low and all that kind of stuff which we’ll get into in a moment but what’s really fascinating is that the company trades below its assets when a company trades below its assets it’s essentially like paying maybe 80 cents for a dollar and so this is really important when you’re investing in a company if you see the book value being larger than the company you have to make sure of course that this isn’t like a value trap and the company is not losing lots of money and this is you know just the assets of the company but we have to understand here that the company really does have tons of earnings and that this company is just trading below its book value because in general with banks tend to trade they tend to trade maybe a little bit about book value but maybe not too much about book value this company trades well below book value and this is what suggests the company is truly an undervalued company well also with a higher book value this also helps to support the intrinsic value tremendously and this means that the intrinsic value is going to likely be higher than what you may expect in terms of the intrinsic value the company’s intrinsic value was really high and this is wasn’t just because of the growth of the earnings and the expected growth of the earnings this was really because of the asset worth of the company being so much higher than the current trading price of the stock and also this goes for the future i expect this company to really be trading at least above the book value of a company just because companies trade above book value generally and this goes for banks this goes for insurance companies and this is just expected for this company here now would say that the company’s shareholder equity is about 200 billion dollars and this is pretty solid this is because the company has a lot of assets that support the trading value of the company we can say that they’ve done very well just in terms of investing and also the company does have a fair amount of debt but it’s not too concerning because the company does have a lot of assets to support that this company has approximately 500 billion dollars in assets then they also have maybe a quarter trillion in just debt and so the deal is for the shareholder equity sits at the asset spice that they have the company this allows the company to at least have asset worth or shareholder equity that is going to support the current book value of the company the shell decree is what determines the book value so since this company is a higher sale equity that means that the book value is going to be higher with the company profiting substantially the shared equity is expected to increase year over year as cash is associated with the shared equity as well and as this company is able to take that money reinvest it back into the company and do other things like that this company really is able to consistently grow its shared equity as time goes on and so for the long term i expect this company to be a really strong value investment and i expect the company’s book value and intrinsic value to increase steadily as well along with the trading value we said that this company has been profiting a lot recently at about eight billion dollars in the most recent quarter we consider that the company brings in plenty of money at you know previous years as well and so this company has done very well during the pandemic unfortunately they struggle a lot during the 2008 recession and this is because the company took on a lot of day not necessary risk that they didn’t need to take on this hurt a lot of banks and so this wasn’t just citigroup of course but just so you know this is just something that we really like to take a good note at because when the company is doing very well during a pandemic this is a economic downturn for just the us and so in general when the company is doing very well during a pandemic and these kind of times this is really showing the company’s strength and this shows that the company really does have at least a strong ability to at least be able to maintain its asset value grow in earnings etc even if the company or even if the united states is struggling economically so this company had lower interest rates and so that hurt the bank uh quite a bit you could see that that did affect the earnings at least for a bit at the beginning but this company made a lot of money during its stock investments so you can see that the company has been able to profit a lot and cop offset that so therefore this company has been able to really do well during this pandemic unlike a lot of other companies out there and so it’s really important to note that this industry and citigroup specifically is doing very well during the pandemic and i expect them to continue to do well as after the pandemic as well this company can support your portfolio during that time likely and this company should be able to offer a very strong dividend to you during economic downturns as well now if we compare the price to the earnings of the company we consider that they have a p e ratio of about nine which is really really low especially for a bank i expect this company to have a price earnings of more about 15 and we could see that that isn’t the case we’d see that this company has done very well in the past with earnings we could see that they also took a big loss of course during 2008 but we already talked about that we consider that this company has been recovering quite a bit recently they’ve been making plenty of money since then we’d say that the company is currently having issues because i think a lot of people are kind of bearish on this company still just because i think people get frightened when they look at cr or previous trading values of the company and then they aren’t necessarily as interested investing in this company because they did take on a lot of risk and they lost a lot of money and that’s to be understood is kind of a you know risky investment but this company has changed a lot in time from then and i think that this company currently trading at like 70 dollars a share is really really low relative to where the company should be trading at i expect this company to be trading not at intrinsic value because when we talk about the projected free cash flow model like i talked about before the deal is that banks don’t tend to trade near that they trade below that but i would expect the company to at least trade above the book value so the idea is it should trade between 80 share and 152 dollars a share about now please do your own research for investing but i do think that this company is going to do very well in the long term and this is primarily because first of all the company has a lot of earnings to support the trading value of the company we consider with the price earnings it’s this low this allows the company to have make this allows the company to be making plenty of money and this is also contributed towards the shareholder equity as the earnings grow and as the earnings are high relative to the trading value of the company this means that the company should likely have a shared equity that should grow at a faster rate than maybe other companies maybe and so this is very important as the shareholder equity as long as it grows quickly this allows the book value to grow quickly and this also helps to increase the intrinsic value at a relatively faster rate too and so this is very important i think with the low priced earnings that’s something very important to look at and in fact i like low priced earnings even more than the book value being higher relative to the trading value and this goes for buffett as well warren buffett has also noted that he likes to look at earnings more than maybe just the asset worth of the company for here we can see that the company is not just a value investment but maybe also a growth investment too and so this company has been willing to put out numerous new credit cards and try to get more people and no new maybe younger generations into the company as well so this company is very innovative i think that this company is similar to capital one and the fact that they are able to at least get their products out to younger generations so that they can get customers and retain those customers for many years to come so i think in the long term this company will do very well and this company should be able to sustain long-term growth in the future we see that this company also buys back its own stock which is also a really great thing for this company when companies buy back their own stock this decreases the outs in the chairs in the market and this helps to basically allow the assets to be distributed across less shares when companies buy back their own stock you own more of the company after that if you own shares of the company so this generally helps to increase the trading value of the company because there’s more assets per share of the company helping to increase the trading value as time goes on now last but not least this company offers a dividend yield of about 2.9 percent this company gives out 51 cents per quarter per share at the time of recording and this company is expected to increase this demand year over year as their earnings increase year over year as well and so this is this in general should allow for the company to have dividend growth in the future and this company is paying you a portion of their earnings every single year this is a great debate stock in my opinion because i think that the company is going to be at least successful in giving you that demand even during dire times like a pandemic and so i think that this company will be able to offer you divvan income if you’re interested in that also this company does seem to be a pretty good value stock for the fact that the company has a low priced earnings has a high intrinsic value and a high book value this company trades below the book value making the company even more valuable from a value investor’s standpoint and also in terms of a growth investment i think that this company is more innovative than other banks at this time and i think that this company may be able to outperform them in the future so overall we like this company but just so you know i’m not a financial advisor or anything like that so please do your own research for investing anyway thank you so much for watching if you like this video please do like and subscribe down below and tell us what you think about this company we’ll try to get back to you anyway thanks again for watching have a great day everybody