Citigroup Stock Surges 61.2% in a Year: Should You Buy It Now?

Core Insights - Citigroup, Inc. (C) shares have increased by 61.2% over the past year, outperforming the industry average of 46% and its close peers, Bank of America (BAC) and Wells Fargo (WFC), which rose by 24% and 45.9% respectively [1][4]. Business Strategy and Performance - Citigroup is focusing on growth in its core businesses by streamlining overseas operations, having exited consumer banking in 14 markets across Asia and EMEA [5][9]. - The company has completed exits from consumer banking in nine countries, including Poland and China, and is winding down operations in Korea and Russia [6][7]. - Wealth management revenues increased by 22% year-over-year, while investment banking revenues rose by 13% year-over-year in the first half of 2025 [8][9]. - Citigroup expects revenue growth at a compounded annual rate of 4-5% by the end of 2026 [8]. Cost Management - The company is implementing a streamlined operating model to reduce expenses, including a plan to cut 20,000 jobs (approximately 8% of its global staff) by 2026 [10][11]. - Total expenses declined nearly 1% year-over-year in the first half of 2025, with management projecting expenses of $53.4 billion for 2025 [12]. Interest Income and Market Conditions - Citigroup's net interest income (NII) rose by 8% year-over-year in the first half of 2025, benefiting from the Federal Reserve's interest rate cuts [13]. - The company raised its NII projection for 2025 to a 4% year-over-year increase, up from a previous estimate of 2-3% [15]. Liquidity and Capital Distribution - As of June 30, 2025, Citigroup's cash and investments totaled $474.4 billion, with a total debt of $373.3 billion [16]. - The company has a strong liquidity coverage ratio of 115% and a common equity tier 1 capital ratio of 13.5% [17]. - Citigroup increased its dividend by 7.1% to 60 cents per share and has a dividend yield of 2.5%, above the industry average of 1.9% [18][21]. Estimates and Valuation - The Zacks Consensus Estimate for Citigroup's 2025 and 2026 sales implies year-over-year increases of 4.2% and 3.1% respectively [22]. - Earnings estimates for 2025 and 2026 suggest year-over-year increases of 27.4% and 27.7% respectively [25]. - Citigroup is currently trading at a forward P/E of 10.65X, below the industry average of 14.48X, indicating it is undervalued compared to peers [28][31]. Investment Consideration - Citigroup's strategic transformation is yielding positive results, with significant share price growth and a focus on high-return businesses [32]. - The combination of operational progress, revenue diversification, and shareholder-friendly capital deployment creates a favorable risk-reward profile for investors [33].