Citigroup's Quiet Turnaround: Is the Stock Finally Worth Buying?
Key Points
Citigroup's stock has been rising strongly, as investors reward the company for its improving performance.
Citigroup's valuation isn't nearly as compelling as it once was, even though it looks cheaper than its competitors.
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Citigroup (NYSE: C) had a great first quarter in 2026. Revenues rose 14% year over year, with earnings jumping from $1.96 per share a year ago to $3.06 in 2026. Given the business performance, it shouldn't be too shocking to find out that the stock is up more than 60% over the past year. Competitors like JPMorgan Chase (NYSE: JPM) and Bank of America (NYSE: BAC) saw advances of "only" 14% and 13%, respectively, over the same span. Have investors missed the opportunity with Citigroup, or is there more upside to come?
Citigroup isn't as attractive as it was
In 2022, Citigroup's price-to-book ratio was roughly 0.5x. Today, the P/B ratio is 1.1x. The price-to-earnings ratio has risen from 6x to 15x. The value proposition isn't nearly as attractive as it once was.
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That said, Citigroup's P/B ratio is still lower than some of its closest peers. For example, Bank of America's P/B ratio is nearly 1.3x, Wells Fargo's (NYSE: WFC) is nearly 1.4x, and JPMorgan's is 2.3x. Given this comparison, Citigroup looks relatively cheap.
But Citigroup's return on average common equity (ROTCE) in the first quarter of 2026 was 13.1%. That was short of Bank of America's 16% and JPMorgan's 23%. To be fair, Citigroup's first-quarter 2026 ROTCE was materially higher than the previous year's 9.1%. The stock price advance is probably a reflection of that clearly positive news.
It doesn't hurt that Citigroup has been buying back shares, either. The bank repurchased $6.3 billion in shares in the first quarter alone. That helps boost earnings, but it doesn't address the underlying business opportunity.
Citigroup may have a little further to go
Given the price-to-book value discount relative to peers, there could be a bit more recovery room for Citigroup's stock. However, the company noted in its first quarter earnings release that "We've entered into the final phase of our divestitures and 90% of our Transformation programs are now at or near our target state."
That statement suggests the turnaround the company has been working on could be very close to completion. And if that is the case, it seems likely that the recovery opportunity in the share price is largely in the rearview mirror. While there is an opportunity for Citigroup to close the book value gap with peers, which is an interesting investment thesis, investors probably shouldn't expect a repeat of the past year's outsize price advance.
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Bank of America is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. Wells Fargo is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.
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