Citigroup Hits 52-Week High: How to Approach the Stock Now?

Citigroup Inc. C shares touched a new 52-week high of $88.82 during yesterday's trading session. The stock closed the session a little lower at $87.60.Over the past year, shares of C have risen 35.3% compared with the industry's growth of 41.2%. Additionally, its close peers, such as Wells Fargo & Company WFC and Bank of America BAC, gained 39.6% and 19.8%, respectively, over the same period.Price PerformanceImage Source: Zacks Investment ResearchWhat Drove C Stock to Hit a 52-Week High?The recent surge in price reflects investors' optimism as Citigroup passed the Federal Reserve’s 2025 stress test. This indicates that the bank can withstand a severe recession with plenty of capital on hand to absorb hundreds of billions of dollars in losses.Post-clearing the stress test, C now has the flexibility to return excess capital to shareholders via dividends and share repurchases. In line with this, the company announced a plan to increase its quarterly dividend by 7% to 60 cents per share, starting in the third quarter of 2025, subject to board approval.The company hiked dividends twice during the last five years, with a dividend payout ratio of 35%. It has a current dividend yield of 2.56%. In comparison, the dividend yield of Wells Fargo & Company and Bank of America is 1.94% and 2.14%, respectively.Citigroup Inc. Dividend Yield (TTM) Citigroup Inc. dividend-yield-ttm | Citigroup Inc. QuoteAside from the dividend, Citigroup also has a share repurchase plan. In January 2025, the company approved a $20 billion common stock repurchase program with no expiration date. The bank bought back $1.75 billion worth of shares in the first quarter of 2025 and is targeting a similar level for the second quarter, leaving nearly $18 billion available for future repurchases. Citigroup’s liquidity position reinforces its stability. As of March 31, 2025, its cash and due from banks and total investments were $761 billion, while its total debt (short-term and long-term borrowing) was $317.5 billion. Given a strong liquidity position, its capital distribution activities seem sustainable.Other Factors Aiding C StockBusiness Restructuring Efforts:The company has been undertaking an extensive organizational realignment aimed at simplifying its governance structure and reducing expenses. In response, the company implemented changes to its operating model in the fourth quarter of 2023, reducing the number of management layers from 13 to eight.In January 2024, the company announced a plan to eliminate 20,000 jobs as part of its broad-scale restructuring effort over the next two years. So far, the company has reduced its headcount by 10,000.These optimization of management layers, along with headcount reduction, is anticipated to save $2-2. 5 billion annually by 2026. Furthermore, management expects that the expense for 2025 will be slightly lower than $53.4 billion. In 2024, the company’s expenses were $53.9 billion.Exit From Non-Core Operations: In order to prioritize its core business growth, the company announced plans to exit consumer banking operations in 14 markets, including Asia and EMEA, in April 2021. Since then, the company has successfully exited from consumer banking operations in nine countries.The wind-down of the company’s consumer banking businesses in Korea and overall presence in Russia are in progress. In May 2025, Citigroup announced plans to sell its consumer banking business in Poland, through its subsidiary Citibank Europe Plc, to VeloBank S.A. (also known as Velobank).Earlier, in December 2024, Citigroup completed its separation of the institutional banking business in Mexico from its consumer, small, and middle-market businesses. In June 2024, Citigroup sold its China-based onshore consumer wealth portfolio to HSBC China, a wholly owned subsidiary of HSBC Holdings plc.As part of its strategy, Citigroup continued to make progress with the wind-down of its Korea consumer banking operations and its overall operations in Russia, as well as preparations for a planned initial public offering of its consumer banking and small business and middle-market banking operations in Mexico.These moves by Citigroup are likely to free up capital for investment in higher-return segments, such as wealth management and investment banking (IB). Citigroup expects IB revenues to increase by a mid-single-digit percentage in the second quarter of 2025.Growth in Net Interest Income (NII): Citigroup has witnessed consistent improvement in its NII, with a compound annual growth rate (CAGR) of 8.4% from 2020 to 2024. This upward momentum continued in the first quarter of 2025.Though, in 2024, the Federal Reserve reduced rates by a 100 basis points, it has held rates steady since then. However, based on the incoming economic data, market participants are predicting at least two rate cuts by year-end. This will likely boost C's lending activity and further support NII growth.Citigroup anticipates NII (excluding Markets) to rise 2–3% in 2025 compared to the prior year.Expansion in Private Credit: Citigroup is expanding its footprint in private lending through strategic partnerships. In sync with this, in June 2025, Citigroup partnered with Carlyle Group to deepen its presence in asset-based private credit, targeting fintech and specialty lending verticals. These alliances are designed to diversify revenue streams and enhance client offerings.In September 2024, it collaborated with Apollo Global Management to launch a $25 billion direct lending initiative focused on North America. These partnerships aim to boost Citigroup’s revenue diversity, deepen client engagement, and expand its presence in private credit.C's Estimates and Valuation AnalysisThe consensus mark for C’s 2025 and 2026 sales suggests a year-over-year increase of 3.5% and 3.2%, respectively. Similarly, the consensus estimate for earnings indicates a 23.2% and 27.6% rise for 2025 and 2026, respectively.Over the past month, the Zacks Consensus Estimate for 2025 earnings has been revised downward; however, the estimate for 2026 has been revised upward. This reflects analysts' cautious stance over the near-term outlook but optimistic over long-term growth potential.Estimates Revision TrendImage Source: Zacks Investment ResearchIn terms of valuation, C stock appears inexpensive relative to the industry. The company is currently trading at a 12-month trailing price-to-earnings (P/E) ratio of 10.46x, which is lower than the industry’s 15.06x.Price-to-Earnings F12 MImage Source: Zacks Investment ResearchMeanwhile, Wells Fargo holds a P/E ratio of 13.23X, while Bank of America’s P/E ratio stands at 12.21X.How to Approach C Stock Now?C’s clearance of the 2025 Fed stress test, strong capital levels, and improving operational efficiency support its commitment to reward shareholders handsomely through increased dividends and a share buyback program.The bank’s focused restructuring, strategic exits, rising NII and expansion into private credit position it for long-term growth.While Citigroup offers a discounted valuation, the bank remains in the middle of a complex overhaul plan. Also, its rising expenses are a near-term concern. Furthermore, as interest rates are less likely to decrease substantially in the near term, it is expected to harm borrowers’ credit profiles. Hence, C’s asset quality is expected to remain weak.Hence, it may not be the ideal time to buy the stock. However, long-term investors with existing holdings may find value in maintaining their stake, given its solid fundamentals.Citigroup currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.Zacks' Research Chief Picks Stock Most Likely to "At Least Double"Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren’t winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.See Our Top Stock to Double (Plus 4 Runners Up) >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Bank of America Corporation (BAC): Free Stock Analysis Report Wells Fargo & Company (WFC): Free Stock Analysis Report Citigroup Inc. (C): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks