CA - Citigroup Remains A Buy With The 2024 Stress Test Results

2024-06-27 16:32:58 ET

Summary

• Besides attractive valuation and a healthy growth outlook, the stress test results provided additional factors to support a bull thesis on C.
• The test results suggest the overall health of the banking sector and also C’s resilience in the case of a severe recession.
• The combination of attractive valuation and a sizable total shareholder yield (cash dividend plus stock buybacks) points to a skewed return/risk profile.

C stock’s 2024 stress test results

I last covered Citigroup (NYSE: C ) with a buy rating in early April after its Q1 earnings report (see the screenshot below). At that time, my bull thesis was anchored in the following three considerations:

• Strong Q1 results, which beat market expectations on both GAAP EPS and revenue.
• Strong CET1 ratio of 13.5%, providing the financial strength to support growth opportunities.
• Reasonable valuations (especially in terms of the P/TBV ratio) and generous capital returns.

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