Citigroup (C) delivered a stellar efficiency in Q3 2025, with each revenues and earnings simply beating estimates. Importantly, all 5 of its enterprise segments posted report revenues within the quarter, and it confirmed good progress on the transformation plan below CEO Jane Fraser. Citi is outperforming giant U.S. banking friends, together with J.P. Morgan Chase (JPM), Wells Fargo (WFC), and Financial institution of America (BAC), and is up over 40% for the 12 months.
www.barchart.com
Citi’s outperformance isn’t just a 2025 factor, and it has risen about 150% during the last two years, which is effectively forward of most of its friends. Together with the capital beneficial properties, Citi traders are additionally rewarded with a beneficiant dividend yield of two.4%, which is larger than many different giant banks. On this article, we’ll study whether or not Citi continues to be a very good purchase, starting with a snapshot of the corporate’s Q3 earnings.
Banks generally posted a robust set of numbers in Q3. Speaking of Citi, America’s third-biggest lender, it posted revenues of $22.1 billion, up 9% year-over-year (YoY) and forward of the $21.09 billion analysts anticipated. Its adjusted earnings per share (EPS) rose 48% over the interval to $2.24, whereas analysts had been anticipating the metric at $1.90. The corporate’s internet credit score losses rose 2% YoY, however whole credit score prices fell 8% through the interval to $2.45 billion. To sum it up, it was a pleasant quarter for Citi, the place it managed to develop its high line and backside line whereas conserving delinquencies in examine.
After Citi’s Q3 earnings, a number of brokerages raised C inventory’s goal value, with Morgan Stanley elevating its to a Road-high of $134 whereas sustaining its “Obese” score. The agency’s new estimate implies an upside of 35% over the subsequent 12 months.
The general Road sentiment is fairly bullish on Citi, and of the 24 analysts protecting C inventory, 12 have a “Sturdy Purchase” score whereas 4 price the inventory as a “Reasonable Purchase.” The remaining eight analysts price C as a “Maintain” or some equal.
www.barchart.com
One of many key pillars of Citi’s transformation is environment friendly capital allocation. Throughout the Q3 earnings name, Fraser stated that “we’re disciplined stewards of our shareholders’ capital, investing it the place we should always and returning what we don’t deploy.”
As a part of the transformation, Citi has exited a number of markets, which has freed up capital and bumped up its return metrics. The corporate’s adjusted return on whole capital employed was 9.2% within the first 9 months of the 12 months, which is now very near the medium-term goal of between 10% and 11% that the corporate has set. Fraser reiterated her earlier views, terming the goal a “waypoint, not a vacation spot,” whereas including that “we see numerous totally different areas of upside.”
The corporate has a $20 billion buyback program, and through Q3, it spent $5 billion on share repurchases, which was $1 billion larger than what it guided for. Whereas Citi didn’t give buyback steerage for the present quarter, CFO Mark Mason hinted that the corporate would proceed prioritizing buybacks. “Whereas we’ve got seen good efficiency within the inventory over the course of the 12 months, we’re nonetheless at and round form of one-times tangible guide worth, and I feel there’s extra upside to the inventory,” stated Mason through the earnings name.
Citi has been a play on the transformation and the anticipated normalization of its valuation multiples.
The transformation has progressed properly, as summed up by Fraser through the Q3 earnings name: “We have now been relentless in our execution, and it’s creating outcomes. Over two-thirds of our transformation applications are at or are near our goal state and we’re making excellent progress within the remaining areas.”
In the meantime, Citi’s outperformance has additionally meant that its valuation hole with friends has narrowed. C inventory now trades barely above the tangible guide worth of $95.72 that it reported on the finish of Q3. Nonetheless, it nonetheless trades beneath the guide worth per share of $108.41. I consider the subsequent milestone in Citi’s valuation rerating can be the inventory rising to its guide worth, which isn’t an unreasonable expectation given the place its friends commerce.
On the dividend entrance, the corporate ought to proceed to extend the payouts even because the precedence with free money can be to repurchase shares. Total, whereas not a screaming purchase because it was when it traded beneath its tangible guide worth, Citi continues to be an honest purchase, given the still-low valuations. The dividend yield stays a cherry on high and would solely add to the full returns that affected person traders make from the inventory.
www.barchart.com
On the date of publication, Mohit Oberoi had a place in: C, BAC. All data and knowledge on this article is solely for informational functions. This text was initially printed on Barchart.com
