Is Citigroup Stock a Buy 13% Below Its 52-Week High?
Is Citigroup the best big bank stock right now? You could make a case for it.
Citigroup's stock is trading 13% below its 52-week high after the bank's strong third-quarter earnings. Despite the dip in shares following the earnings release, analysts believe there may be a buying opportunity in the stock. Citigroup reported its highest third-quarter revenue in a decade, with an 8% year-over-year increase. Net interest income rose 14%, while net income grew by 37% to $5.2 billion.
Earnings per share (EPS) increased 53% to $2.85, exceeding estimates. The bank's efficiency ratio improved to 58.5%, and its return on tangible common equity (ROTCE) improved 350 basis points year-over-year to 11.5%. Citigroup is expected to finish the year with ROTCE above its target range and north of 11%. The bank has raised its dividend and boasts a strong capital position, comfortably above the Federal Reserve's 11.6% CET1 ratio mandate.
With a low dividend payout ratio of 24%, Citigroup has ample room to maintain or raise its dividend. The stock is up 6% year-to-date and 29% over the past 12 months and is currently trading at 10 times forward earnings. A majority of analysts rate it as a buy, with a median price target of $154 per share, representing a potential 25% upside.
While the analyst is cautious about the economic outlook, they still consider Citigroup a solid dividend stock that is cheap and outperforming the big four banks over the past year.
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