Citigroup Stock Falls 17.9% in a Month: Should You Buy the Dip?

The U.S. stock markets seesawed over the past month and were extremely volatile, with the banking stocks witnessing a sharp decline and Citigroup Inc. C not being an exception.Over the past month, C shares tanked 17.9% compared with the industry’s decline of 16.6% and the S&P 500 index fall of 9%. Meanwhile, Citigroup’s peers Bank of America BAC and Wells Fargo WFC dipped 14% and 14.8%, respectively.Price Performance Image Source: Zacks Investment Research The recent market slump is largely due to mounting concerns about the economic uncertainties and the impacts of policies pursued by the Trump administration, raising fears of a full-scale trade war. Also, manufacturing and business activity is slowing, job growth is weakening, and consumer confidence is declining, indicating a slowdown in the U.S. economy.Between uncertain tariff policies and recent weaker-than-expected economic data, the probability of a U.S. recession has increased sharply, leading to bearish investor sentiments.Amid the uncertain and volatile backdrop, is Citigroup stock worth adding to your portfolio? Let us find out.Citigroup’s Business Restructuring EffortsCEO Jane Fraser is executing a sweeping business overhaul to enhance Citigroup’s performance, reduce costs and simplify operations.The transformation process included an organizational restructuring that replaced the reportable segment with five new ones. The reorganization trimmed management layers. In January 2024, the company announced the plan to eliminate 20,000 jobs as part of its broad-scale restructuring effort over the next two years.The company has been on track to cut jobs. In 2024, it reduced its headcount by roughly 10,000. Hence, total reported expenses declined more than 4% in 2024 on a year-over-year basis to $54 billion.For 2025, management expects expenses to decline slightly from the 2024 reported level.C’s Emphasis on Core OperationsApart from the major organizational overhaul, the company has been emphasizing growth in core businesses through streamlining operations internationally. In April 2021, Citigroup announced its plan to exit the consumer banking business in 14 markets across Asia and the EMEA. Since then, the company exited consumer businesses in nine countries.In December 2024, Citigroup completed the separation of its institutional banking business in Mexico from its consumer, small and middle-market businesses. The company is preparing for a planned IPO of its consumer, small business and middle-market banking operations in Mexico, and has restarted the sales process for the consumer banking business in Poland. In June 2024, C sold its China-based onshore consumer wealth portfolio to HSBC China. The bank closed its U.K. retail banking business and expanded personal banking and wealth management businesses in the region.These moves are intended to free up capital, which Citigroup can utilize to modernize operations and invest in high-returning businesses like investment banking and wealth management.Through such efforts, the company expects revenues to see a compounded annual growth rate (CAGR) of 4-5% by 2026-end and drive $2-2.5 billion of annualized run rate savings by 2026.Management expects the return on tangible common equity to be 10-11% by 2026.Citigroup to Benefit From Fed Rate CutsThe Federal Reserve has lowered the interest rates by 100 basis points in 2024. The Fed fund rates are now 4.25-4.5%. In 2024, Citigroup’s net interest income (NII) (excluding Markets) declined 1% to $47.1 billion from the year-ago period. Though the central bank has kept interest rates steady this year, it may have to lower them, given recession fears to support the economy. The market participants forecast three interest rate cuts this year, up from one estimated a few weeks ago. As the rates come down, Citigroup’s funding costs (which have been on a record high since last year) will decline, supporting its NII growth. In 2025, management expects NII (excluding Markets) to be modestly up from the 2024 reported level, with momentum continuing into 2026.C’s Solid Balance Sheet PositionAs of Dec. 31, 2024, Citigroup’s liquidity resources were $933 billion, while its total debt (short-term and long-term borrowing) was $335.8 billion. C’s strong liquidity profile will support its capital distribution activities. In July 2024, the company hiked its quarterly dividend by 6% to 56 cents per share. In 2024, it repurchased $2.5 billion worth of its common stock. On Jan. 13, 2025, Citigroup's board of directors approved a $20-billion common stock repurchase program with no expiration date. The bank aims to repurchase $1.5 billion of its common stock in the first quarter of 2025.Citigroup Shares Trade at a DiscountFrom a valuation standpoint, the company appears inexpensive relative to the industry. It is currently trading at a discount with a forward 12-month price-to-earnings (P/E) multiple of 8.55X, below the industry average of 11.92X. Price-to-Earnings Image Source: Zacks Investment Research The stock is significantly cheaper than its peer BAC and WFC’s current forward 12-month P/E of 10.35X and 11.09X, respectively.Is C Stock Worth Buying Now?The possibility of a recession could work against Citigroup by causing a decline in loan demand and an increase in delinquency rates. Nonetheless, they can also work in the company's favor as recession risks can lead the Fed to lower interest rates to support the economy, which will boost Citigroup’s NII growth.The company’s business restructuring efforts and emphasis on its core operations by divesting non-core units, provide a solid foundation for growth, supporting its financials.Sales Estimates Image Source: Zacks Investment Research Earnings Estimates Image Source: Zacks Investment Research Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Anticipated tax cuts, favorable regulations and expansionary fiscal measures under the Trump administration will likely act as catalysts for the company in the long run.Given Citigroup's solid growth trajectory and bullish analyst expectations, investors should consider buying the C stock at its current price levels for potential gains. The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Bank of America Corporation (BAC): Free Stock Analysis Report Wells Fargo & Company (WFC): Free Stock Analysis Report Citigroup Inc. (C): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks