Citigroup’s stock (NYSE: C) has seen a 23% year-to-date gain, outperforming the 9% rise in the S&P 500 over the same period. With the stock currently trading at $63 per share, which is below its fair value estimate of $67 according to Trefis, there is potential for further growth. However, Citigroup has underperformed the broader market in each of the last 3 years, with returns of -2% in 2021, -25% in 2022, and 14% in 2023. Despite the challenges faced by individual stocks in recent years, the Trefis High Quality Portfolio, consisting of 30 stocks, has consistently outperformed the S&P 500. Given the uncertain macroeconomic environment, it remains to be seen whether Citigroup will continue to underperform or see a strong jump in the future.
In the first quarter of 2024, Citigroup surpassed street estimates by reporting total revenues of $21.1 billion, although down 2% year-over-year. While certain segments saw declines, including wealth management, sales & trading, and other units, these were offset by increases in services, banking, and personal banking divisions. However, the bank experienced a decrease in net income of 27% year-over-year to $3.37 billion, with provisions for credit losses and total operating expenses as a percentage of revenues also increasing unfavorably in the quarter.
In FY 2023, Citigroup’s top line grew by 4% year-over-year to $78.5 billion, driven by gains in services, personal banking, and other categories. However, declines in sales & trading, banking, and wealth management segments offset some of these gains. The bank’s net income declined by 38% year-over-year to $9.23 billion, with provisions and total operating expenses also seeing significant increases. Looking ahead to Q2 and FY 2024, Citigroup is expected to continue this trend, with revenues estimated to reach $80.7 billion and an annual GAAP EPS of $5.81, leading to a valuation of $67 with a P/E multiple just below 12x.
Despite the challenges faced by Citigroup in recent years, the bank is positioned for potential growth in the future. The stock’s performance has shown resilience amid the current financial backdrop, with the potential for further gains as it works to improve revenues and net income margins. With a strong focus on services, banking, and personal banking divisions, Citigroup is aiming to overcome previous setbacks and drive growth in the coming quarters. Investors will be closely watching Citigroup’s performance in the face of macroeconomic uncertainties, to see if the bank can overcome its underperformance in recent years and deliver strong results moving forward.
