Is Citigroup Headed in the Right Direction?

With shares of Citigroup (NYSE:C) trading at around $47.26, is C an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

Citigroup is one of the largest banks in the world with over 200 million customers. Operations include consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management.

The government has been one of Citigroup’s best friends over the past several years, but that’s old news. Instead of holding a grudge, it’s important to look at the current situation. At the moment, Citigroup is focused on high-margin loan growth and increasing capital levels.

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Citigroup might have failed the stress test last year, but that wasn’t the case this year. This year, the FED approved Citigroup’s $1.2 billion in share repurchases through 2014. Citigroup didn’t make a request for a change in dividend yield, which might seem like a negative to some investors, but Citigroup is acting prudently. Instead of giving into pressure to please others right now, CEO Michael Corbat has chosen to plan for long-term success.

Citigroup has also been divesting where necessary. For example, it has put its Brazilian consumer finance division up for sale, which should save $761 million and lead to improved profitability.

Citigroup is often mentioned in the same breath as JPMorgan Chase & Co. (NYSE:JPM) and Bank of America Corporation (NYSE:BAC). The chart below will compare some important fundamentals. Prior to viewing these fundamentals, it should be noted that Citigroup has a market cap of $143.61 billion, JPMorgan has a market cap of $190.25 billion, and Bank of America has a market cap of $136.01 billion.

C

JPM

BAC

Trailing   P/E

19.36

9.62

50.28

Operating   Margin

13.38%

35.88%

11.36%

ROE

4.27%

10.98%

1.79%

Dividend   Yield

0.10%

2.40%

0.30%

Operating   Cash Flow

$14.27 Billion

$25.08 Billion

-$13.86 Billion

Short   Position

N/A

1.20%

1.50%

Beta

1.93

1.65

1.76

 

Let’s take a look at some important numbers prior to forming an opinion on this stock…

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