Is Citigroup Stock a Buy Now?

Citigroup shares have outperformed in early 2025, gaining 4% YTD, driven by strategic initiatives and strong Q1 earnings that exceeded expectations with a 3% revenue increase and EPS up 24% to $1.96. While new tariffs pose potential headwinds, management anticipates that its Treasury and Trade Solutions (TTS) business may benefit from supply chain adjustments, guiding for full-year revenue growth of 2-3%; furthermore, the stock trades at a discount to peers with an attractive 3% dividend yield, suggesting potential undervaluation.

Analysis

Citigroup has demonstrated a strong start to 2025, with its shares returning 4% year-to-date, outperforming amidst market turbulence. This performance is underpinned by strategic initiatives focused on streamlining international operations and investing in high-margin segments, which culminated in first-quarter earnings that surpassed Wall Street expectations. The bank reported a 3% year-over-year increase in total revenue and a 24% rise in earnings per share to $1.96, driven by a 5% decline in operating expenses and growth across all five business segments, notably a 24% revenue surge in wealth management and a 12% climb in markets group revenue. Despite potential headwinds from new U.S. trade tariffs, which could dampen investment banking activity, management anticipates that its Treasury and Trade Solutions (TTS) business may benefit from corporate supply chain adjustments and increased demand for hedging solutions. Citigroup projects full-year 2025 revenue growth of 2% to 3%, reflecting confidence in its diversified model. The stock's valuation appears compelling, trading at 0.7 times book value and 10 times its consensus 2025 earnings estimate, a significant discount to peers, complemented by a 3% dividend yield.

Key Decisions for Investors

• Investors could consider the stock's current undervaluation relative to peers and recent robust financial performance, including strong Q1 EPS growth and positive revenue guidance, as supportive of potential share price appreciation.
• Evaluate the attractive 3% dividend yield, backed by solid cash flows and a strong balance sheet, for income-oriented investment strategies.
• Monitor the impact of new U.S. trade tariffs on client activity and investment banking volumes, alongside the performance of the Treasury and Trade Solutions segment, which management believes could offset some headwinds.