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Shares of
Citigroup
(NYSE: C)
have outperformed at the start of 2025, returning a solid 4% year to date as of this writing, despite the stock market turbulence. The megabank has managed to brush aside uncertainties regarding the looming impact of sweeping changes to U.S. trade policy, while capitalizing on resilient economic conditions. Several strategic initiatives implemented in recent years appear to be paying off, supporting steady growth and climbing profitability.
Do these positive trends make Citigroup stock a buy now?
Citigroup's strong start to 2025
Citigroup has undergone a significant transformation in recent years under the leadership of CEO Jane Fraser. The bank remains one of the world's largest financial institutions, with a diversified global franchise, yet it has taken significant steps to streamline its international operations. Efforts to divest noncore businesses, while investing in high-margin segments, have bolstered the bank's balance sheet and helped it generate more sustainable growth.
The results were on full display when Citigroup's first-quarter earnings for the period ended March 31 exceeded Wall Street expectations. Total revenue climbed by 3% year over year, while a 5% decline in operating expenses helped propel earnings per share (EPS) to $1.96, an increase of 24%.
All five of the bank's business segments contributed to the strong performance, showcasing Citigroup's ability to leverage synergies across its interconnected businesses. Citigroup's wealth management achieved a notable 24% revenue increase, capturing client asset growth. U.S. Personal Banking has also been a bright spot, with momentum in branded credit cards and a favorable deposit interest rate spread. The markets group revenue climbed by 12% from last year amid robust fixed income and equities trading activity.
Resiliency through tariff uncertainties
The macroeconomic environment has shifted in the second quarter, as the Trump administration implements
tariffs
on imported goods into the United States. Although various exemptions, deadline extensions, and ongoing negotiations have been announced, experts warn that the policy may cause short-term economic challenges.
For Citigroup, clients may grow cautious and reassess investment opportunities, marking a slowdown in the business. There are already signs that
investment banking
activity has stalled as corporations hold off on major deals.
On the other hand, some segments could benefit from the trade chaos, at least helping to offset declines in fees elsewhere. Citigroup's Treasury and Trade Solutions (TTS) business, which handles cash management and working capital solutions, could capture new business opportunities as corporate customers move to reroute their supply chains or require hedging foreign exchange.
That was the message from management, citing the bank's capital strength and strong reserves supporting its ability to navigate any market environment. For full-year 2025, the bank is guiding for revenue between $83.1 billion and $84.1 billion, representing an increase of 2% to 3% compared to 2024, projecting confidence in its diversified business model.
A compelling valuation
While some caution toward the banking industry is justified, Citigroup as a potential investment stands out through its attractive value. The stock is trading at just 0.7 times its book value and 10 times its consensus 2025 earnings per share estimate as a forward price-to-earnings (P/E) ratio, both at a steep discount to megacap banking peers like
JPMorgan Chase
,
Bank of America
, and
Wells Fargo
.
Amid Citigroup's ongoing turnaround and strengthened fundamentals compared to its historical challenges in the past decade, there is a case to be made that it is fundamentally undervalued, with room for its valuation gap to narrow, potentially driving share price appreciation.
Citigroup stock also shines with its 3% dividend yield, notably higher than Bank of America's 2.3%. The $0.56-per-share quarterly payment is supported by underlying cash flows and a robust balance sheet, making it a solid choice for income-focused investors.
Decision time: The rally can keep going
There's a lot to like about Citigroup, which is well-positioned to continue rewarding shareholders. With some optimism toward the U.S. economy, I'm bullish on this banking leader and predict its stock price will be higher by this time next year. Shares remain a great option within diversified portfolios.
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Wells Fargo is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money.
Dan Victor
has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America and JPMorgan Chase. The Motley Fool has a
disclosure policy
.
