C - Citigroup Should Benefit From Expense Inflection Point

2024-04-22 15:44:21 ET

Summary

• Citigroup has been a laggard since the Financial Crisis but has the potential for a 50% upside over the next 3-5 years.
• The bank is currently under-earning its potential, but if it achieves its medium-term targets, it could have a 15.2% earnings yield.
• Stock buybacks would be beneficial, but regulatory restrictions limit the bank's ability to capitalize on opportunities.

Citigroup ( C ) has been the clear laggard of the big U.S. banks since the Financial Crisis. It was a poorly constructed collection of businesses, run inefficiently for decades. With that said, there have been opportunities to make a lot of money in the stock by buying at sizeable discounts to tangible book value, while prices close to tangible book value have made for good selling prices. There is hope that Citigroup's management team is on the right track and finally should start hitting the inflection points where we see improving operating leverage, which should greatly enhance normalized earnings. Citigroup easily has a 50% upside potential over the next 3-5 years for investors willing to endure the frustrations that come with being a Citigroup shareholder....

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