Here's Why Citigroup Stock Is a Buy Before April 15

Core Viewpoint - Anticipation is building for Citigroup's Q1 earnings report on April 15, with shares down 16% year-to-date amid economic uncertainties and trade tariffs, leading shareholders to seek signs of resilience to reverse the stock's decline from an eight-month low [1] Group 1: Trade Tariffs Impact - The Trump administration's trade policy overhaul includes a 10% flat tariff on imports, with higher tariffs on specific countries like China, surprising Wall Street and contributing to a stock market decline [3] - Citigroup faces challenges from the tariff regime, as clients may become cautious, potentially leading to increased delinquencies in mortgage lending, auto financing, and credit card businesses [5] - However, segments like Treasury and Trade Solutions may benefit from supply chain disruptions, capturing new business as corporate customers seek foreign exchange hedging [6] Group 2: Q1 Earnings Preview - Citigroup's Q1 earnings report is expected to show solid revenue and earnings, reflecting pre-trade war conditions, but uncertainty exists around the allowance for credit losses, which could indicate borrower health concerns [8] - The bank previously projected a revenue growth of 3% to 4% for 2025, with net income supported by cost-saving initiatives, and evidence of underlying strength could be positively received by the market [9] Group 3: Investment Appeal - Citigroup shares have declined 30% from recent highs, potentially pricing in extreme scenarios and setting a low expectation bar, positioning the stock for potential outperformance [10] - The stock trades at a price-to-book (P/B) ratio of 0.6 and a forward price-to-earnings (P/E) ratio of 8, both significantly lower than peers, suggesting undervaluation [11] - Citigroup's international corporate lending profile, with 44% of 2024 corporate lending revenue from outside the U.S., provides an edge over domestic-focused competitors [12] Group 4: Dividend and Long-term Outlook - Citigroup offers a 3.8% dividend yield, higher than Bank of America's 2.9%, supported by strong cash flows and a robust balance sheet despite near-term volatility [14] - The stock is viewed as a buy-the-dip opportunity, with upcoming Q1 earnings potentially serving as a catalyst for recovery, making it an attractive option for long-term investors [15]