Citigroup Stock Has Affordable Valuation, Despite Broader Market Woes (NYSE: C)

Citigroup‘s (NYSE: C) share price has taken a beating since its recent mid-April highs of near $5.00 and is now trading down near $3.75, representing a 25% decline in value. Some investors believe that the market became a bit too bullish when the government announced it would divest itself from Citigroup, but the real drag on financial stocks in the United States is not because of domestic issues, but the looming financial crisis in Europe.

The fear that there would be an economic meltdown in the Eurozone has been tempered during the last week with the announcement of a trillion dollar bailout package for economically troubled countries in the European Union, but there’s still substantial underlying concern. Investors remember well the losses that they took during the last financial crisis and aren’t too excited for the second round of a global recession.

Financial stocks across the board have also been hit because of a securities fraud charge from the SEC against Goldman Sachs. That investigation has expanded and now almost all of the major banks are under the magnifying glass of the SEC to determine whether or not improprieties took place relating to the sale of collateralized debt obligations.

Although Citigroup has taken a significant hit in its stock price from broader market issues, there’s still a lot that’s desirable about the company’s stock.  Citigroup has $769.33 billion in cash on hand and has a book value of $5.28 per share, making it a real value at $3.75. Although book value is a rather basic measure, it gives investors an idea of how much hard assets are backing each share of ownership. The consideration that Citigroup has cash-per-share of $26.55 makes it a clear favorite in terms o valuation.

Typically stock in most companies is worth far more than the cash value that the company owns per share, suggesting that Citigroup could do a lot to beef up its earning power and stock price in the years to come. If Citigroup makes good use of that capital, it could come out as a global financial powerhouse during the next period of economic growth.