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Citigroup (C) Scales 52-Week High on Investors' Optimism
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Shares of Citigroup Inc. (C - Free Report) crafted a 52-week high, touching $67.75 at the beginning of trading session on Jun 29. However, this Wall Street biggie closed the session at $66.98, which reflects a solid year-to-date return of 12.7% as compared with 4.0% growth recorded by the Zacks categorized Regional Banks-Major industry.
Growth Drivers
The Federal Reserve’s nod for Citigroup’s 2017 capital plan acted as the major driving factor for the 52-week high. Other 33 big banks, including JPMorgan Chase & Co. (JPM - Free Report) , Bank of America Corporation (BAC - Free Report) and Wells Fargo & Company (WFC - Free Report) , also received approval for their respective capital plans.
Citigroup’s capital plan includes dividend hike (subject to board approval) to 32 cents per share, double from the prior pay out. Based on yesterday’s closing price, the dividend yield is 1.9%.
Further, Citigroup announced a share repurchase authorization worth $15.6 billion for the next four quarters, summing the capital deployment to $18.6 billion.
Given its healthy liquidity position and favorable payout ratio compared to the industry, Citigroup’s capital deployment activities look sustainable.
Upsurge to Continue?
Citigroup has been emphasizing on growth in core businesses through expense management and streamlining operations internationally. In addition, the company continues to optimize its branch network, with focus on core urban markets, improving digital channels and reducing branches. It is also making investments in several areas to stoke growth.
Also, revenues recorded a CAGR of 3.3% over four years (2012–2015). Though revenues declined in 2016, we expect the bank to record significant growth in revenues in the near term, with consistent economic recovery and focus on core operations with strategic actions. Notably, management anticipates consistent growth in net interest revenue in 2017.
However, Citigroup is burdened with numerous investigations and lawsuits escalating legal costs and limiting the company’s business growth. Additionally, although Citigroup's underlying franchises of the consumer businesses have remained strong, its net interest margin (NIM) has remained under pressure for the past several quarters.
Though the company should benefit in a rising rate environment, the near-term outlook remains weak. Improvement in the core franchise is expected to be mitigated by the persistent decline in the company’s legacy holdings portfolio. Hence, the stock carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Citigroup (C) Scales 52-Week High on Investors' Optimism
Shares of Citigroup Inc. (C - Free Report) crafted a 52-week high, touching $67.75 at the beginning of trading session on Jun 29. However, this Wall Street biggie closed the session at $66.98, which reflects a solid year-to-date return of 12.7% as compared with 4.0% growth recorded by the Zacks categorized Regional Banks-Major industry.
Growth Drivers
The Federal Reserve’s nod for Citigroup’s 2017 capital plan acted as the major driving factor for the 52-week high. Other 33 big banks, including JPMorgan Chase & Co. (JPM - Free Report) , Bank of America Corporation (BAC - Free Report) and Wells Fargo & Company (WFC - Free Report) , also received approval for their respective capital plans.
Citigroup’s capital plan includes dividend hike (subject to board approval) to 32 cents per share, double from the prior pay out. Based on yesterday’s closing price, the dividend yield is 1.9%.
Further, Citigroup announced a share repurchase authorization worth $15.6 billion for the next four quarters, summing the capital deployment to $18.6 billion.
Given its healthy liquidity position and favorable payout ratio compared to the industry, Citigroup’s capital deployment activities look sustainable.
Upsurge to Continue?
Citigroup has been emphasizing on growth in core businesses through expense management and streamlining operations internationally. In addition, the company continues to optimize its branch network, with focus on core urban markets, improving digital channels and reducing branches. It is also making investments in several areas to stoke growth.
Also, revenues recorded a CAGR of 3.3% over four years (2012–2015). Though revenues declined in 2016, we expect the bank to record significant growth in revenues in the near term, with consistent economic recovery and focus on core operations with strategic actions. Notably, management anticipates consistent growth in net interest revenue in 2017.
However, Citigroup is burdened with numerous investigations and lawsuits escalating legal costs and limiting the company’s business growth. Additionally, although Citigroup's underlying franchises of the consumer businesses have remained strong, its net interest margin (NIM) has remained under pressure for the past several quarters.
Though the company should benefit in a rising rate environment, the near-term outlook remains weak. Improvement in the core franchise is expected to be mitigated by the persistent decline in the company’s legacy holdings portfolio. Hence, the stock carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
"5 Trades Could Profit ""Big-League"" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>"