What Does the Market See in Wells Fargo That It Doesn't See in Citigroup?

If you look at this year's biggest gains in the financial industry, Wells Fargo (NYSE: WFC) is near the top of the list, with its stock climbing roughly 50% year to date. Citigroup (NYSE: C), meanwhile, has only seen its stock grow nearly 12%, which is not bad, but not exactly good compared to the rest of the sector. Citigroup also trades at a lower valuation than Wells Fargo, even though Wells Fargo's valuation is not great when you compare it to the industry overall.

While they are different banks with very different models, both Wells Fargo and Citigroup are facing regulatory issues and have lagged their peers in terms of returns in recent years. So why has Wells Fargo rebounded more than Citigroup? And why does it trade at a higher valuation? My main theory on the gap has to do with the turnaround story each bank is telling, and how well the market understands and perceives each.

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Source Fool.com