C - Citigroup: Following Up On My Top Value Idea Which Is Up 34% Since October
2024-02-21 09:00:00 ET
Summary
- Citigroup shares have appreciated by 33.94% since the last article, outperforming the S&P 500.
- Risks to the investment thesis include the potential for a credit crunch and the impact of a higher for longer rate environment.
- Citigroup's Q4 results were mixed, but CEO Jane Fraser's restructuring efforts are showing promise for the future.
In the fall of 2023, Seeking Alpha had a competition for contributors to write about their best value ideas. I had written about Citigroup ( C ) and feel there is still a large long-term opportunity as Jane Fraser (Citigroup CEO) continues to overhaul the company. The numbers still don't make sense, and I continue to see Citigroup as a value play despite its recent appreciation. Citigroup is trading at $54.85, which is a -44.43% discount to its current book value of $98.71. Even when you strip away goodwill and other line items, the current tangible book value is $86.19, which still leaves a large spread between tangible book value and where shares are currently trading. The dividend yield has fallen just under 4% to 3.87% due to price appreciation, but many investors, such as myself, have locked in a yield on cost that exceeds 5%. I believe that there is still a lot of value to be unlocked in shares of Citigroup and that if you have a long-term time horizon, this can be an investment that generates modest passive income while appreciating in value. Recently, Piper Sandler upgraded Citigroup to overweight from neutral, raising its price target from $56 to $63. I am still very bullish on Citigroup and plan on reinvesting the dividends as I wait for my investment thesis to continue playing out....
Citigroup: Following Up On My Top Value Idea Which Is Up 34% Since October