We've been asking ourselves recently if the market has placed a fair valuation on Citizens Financial. Let's dive into some of the fundamental values of this large-cap Finance company to determine if there might be an opportunity here for value-minded investors.
Citizens Financial Is Potentially Undervalued and Trades Below Its Graham Number:
Citizens Financial Group, Inc. operates as the bank holding company for Citizens Bank, National Association that provides retail and commercial banking products and services to individuals, small businesses, middle-market companies, corporations, and institutions in the United States. The company belongs to the Finance sector, which has an average price to earnings (P/E) ratio of 14.34 and an average price to book (P/B) ratio of 1.57. In contrast, Citizens Financial has a trailing 12 month P/E ratio of 6.6 and a P/B ratio of 0.6.
Citizens Financial's PEG ratio is 8.91, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
The Business Runs With Low Debt Levels:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $5,758 | $6,189 | $5,357 | $4,851 | $7,060 | $9,154 |
| Interest Income (MM) | $4,532 | $4,614 | $4,586 | $4,512 | $6,012 | $6,591 |
| Operating Margins | 38.0% | 36.0% | 24.0% | 61.0% | 38.0% | 32.0% |
| Net Margins | 30.0% | 28.0% | 20.0% | 48.0% | 28.0% | 25.0% |
| Net Income (MM) | $1,721 | $1,791 | $1,057 | $2,319 | $2,073 | $2,278 |
| Depreciation & Amort. (MM) | $486 | $633 | $578 | $625 | $565 | $468 |
| Earnings Per Share | $3.58 | $3.97 | $2.47 | $5.43 | $4.34 | $4.31 |
| Diluted Shares (MM) | 480 | 451 | 428 | 427 | 478 | 529 |
| Free Cash Flow (MM) | $1,535 | $1,571 | -$7 | $2,151 | $3,993 | $5,563 |
| Capital Expenditures (MM) | $232 | $126 | $118 | $124 | $126 | $161 |
| Net Current Assets (MM) | -$114,127 | -$115,742 | -$131,646 | -$131,392 | -$190,796 | -$187,178 |
| Long Term Debt (MM) | $15,925 | $14,047 | $13,122 | $6,932 | $15,887 | $14,100 |
Citizens Financial has a pattern of improving cash flows and low debt levels. Additionally, the company's financial statements display growing revenues and decreasing reinvestment in the business and positive EPS growth. Furthermore, Citizens Financial has average net margins with a stable trend.
