Is Citigroup Stock Worth Buying as It Gains 13.2% in a Month?
Citigroup, Inc. C shares have gained 13.2% over the past month compared with the industry’s growth of 11.5% and the S&P 500 index rise of 2.9%. Meanwhile, Citigroup’s peers Bank of America BAC and Wells Fargo WFC have grown 3.3% and 13.8%, respectively.
Price Performance
Given the recent strength in share price, is the C stock worth investing in now? To answer this, it is essential to delve into the details and evaluate various factors at play.
Citigroup’s Business Restructuring Efforts
C’s CEO Jane Fraser is executing a sweeping overhaul of the bank to enhance its performance, reduce costs and simplify business operations.
The transformation process included an organizational restructure that replaced the reportable segment with five new reportable operating segments. The reorganization trimmed management layers. In January 2024, C announced the plan to eliminate 20,000 jobs as part of its broad-scale restructuring effort over the next two years.
The company remains on track to cut jobs. Last year, it reduced its headcount by roughly 10,000. Hence, in 2024, total reported expenses declined more than 4% on a year-over-year basis to $54 billion.
For 2025, management expects expenses to be slightly lower than the 2024 reported level.
2025 Expense Outlook
Image Source: $Citigroup Inc(C-N)$.
Citigroup’s Focus on Core Operation
Apart from the major organizational overhaul, the company has been emphasizing growth in core businesses through streamlining operations internationally. In April 2021, Citigroup announced its plan to exit the consumer banking business in 14 markets across Asia and the EMEA. Since then, the company exited consumer businesses in nine countries.
In December 2024, Citigroup completed the separation of its institutional banking business in Mexico from its consumer, small and middle-market businesses. The company is preparing for a planned IPO of its consumer, small business and middle market banking operations in Mexico, and has restarted the sales process for the consumer banking business in Poland.
In June 2024, the company sold its China-based onshore consumer wealth portfolio to HSBC China. The bank winded down its U.K. retail banking business and expanded personal banking and wealth management businesses in the region.
These moves are intended to free up capital, which Citigroup can utilize to modernize operations and invest in its high-returning businesses like investment banking and wealth management.
Through such efforts, the company expects revenues to see a compounded annual growth rate (CAGR) of 4-5% by 2026-end and will further drive $2-2.5 billion of annualized run rate savings by 2026.
Management expects the return on tangible common equity to be 10-11% by 2026.
Return on Tangible Common Equity
Citigroup’s NII to Benefit From Relatively Lower Fed Rates
A cautious rate-cutting approach is now being pursued by the Federal Reserve due to persistent inflation, which is expected to be aggravated as a result of the Trump administration’s plan to impose tariffs on China, Canada and Mexico. Though the tariff imposed on Canada and Mexico imports has been postponed by a month, the tariffs on China goods took effect on Feb. 4, 2025.
During the Jan. 29 meeting, the central bank held interest rates steady. The Fed Chair Jerome Powell stated there would be no rush to cut them again until inflation and jobs data made it appropriate.
The Fed has lowered the interest rates by 100 basis points in 2024. The fed fund rates are now 4.25-4.5%.
In 2024, Citigroup’s NII (excluding Markets) declined 1% to $47.1 billion from the year-ago period. In 2025, management expects NII (excluding Markets) to be modestly up, with momentum continuing in 2026.
2025 NII Outlook
Citigroup’s Digital Initiative Drives Growth
The company’s initiative to accelerate its digital strategy looks encouraging. In December 2024, Citigroup began rolling out artificial intelligence (AI) tools for employees in eight countries — United States, Canada, Hungary, India, Ireland, Poland, Singapore and the U.K. Around 140,000 employees will have access to the tools — Citi Assist and Citi Stylus. These will be gradually expanded to other markets.
Additionally, in November 2024, Citigroup made a minority investment in Pylon to automate mortgage origination and provide interim funding. In October 2024, C entered a multi-year agreement with Google Cloud, which is intended to support Citigroup’s digital strategy through cloud technology and AI.
At the end of 2024, C’s active digital users increased 5% on a year-over-year basis. The company’s efforts to accelerate digital growth will enable it to enhance its top-line growth and improve operating efficiency in the upcoming period.
Citigroup Stock Trades at a Discount
From a valuation standpoint, the company appears inexpensive relative to the industry. It is currently trading at a discount with a forward 12-month price-to-earnings (P/E) multiple of 10.69X, below the industry average of 14.66X. The stock is also significantly cheaper than its peer BAC and WFC’s current forward 12-month P/E of 12.78X and 13.72X, respectively.
Price-to-Earnings F12M
Image Source: Zacks Investment Research
Is Citigroup Stock Worth Buying Now?
C’s business restructuring efforts and emphasis on its core business growth by divesting non-core units provide a solid foundation. The relatively lower fed rate will support its financials in the upcoming period.
Sales Estimate
Earnings Estimate
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Citigroup rewards its shareholders handsomely. In July 2024, C hiked its quarterly dividend by 6% to 56 cents per share. It has been consistently paying quarterly cash dividends. The bank hiked dividends twice in the last five years, with a dividend payout ratio of 38%.
The company also has a share repurchase plan. In January 2025, the board of directors authorized a $20-billion share repurchase plan with no expiration date. For the first quarter of 2025, Citigroup expects to buy back $1.5 billion worth of shares after having repurchased $1 billion worth of shares in the fourth quarter of 2024.
Anticipated tax cuts, favorable regulations and expansionary fiscal measures under the new Trump administration will likely act as a positive development for the company in the long run.
Given Citigroup's solid growth trajectory, investors should consider investing in the C stock at its current price levels for potential gains. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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