Citigroup Stock Jumps on Earnings, $20 Billion Stock Buyback News
Citigroup stock is soaring Wednesday after the big bank topped earnings expectations and unveiled a massive stock buyback program. Here's why that's important.
Citigroup (C) stock is higher in Wednesday's session after the banking giant beat top- and bottom-line expectations for its fourth quarter and announced a new $20 billion share repurchase program.
In the quarter ending December 31, Citigroup said its revenue increased 12.3% year over year to $19.6 billion, driven by growth across all of its business units. Its earnings per share (EPS) rose 59.5% from the year-ago period to $1.34.
"2024 was a critical year, and our results show our strategy is delivering as intended and driving stronger performance in our businesses," said Citigroup CEO Jane Fraser in a statement. "We delivered expenses within our guidance, improved our efficiency ratio, and concluded a significant reorganization of our firm."
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The results beat analysts' expectations. Wall Street was anticipating revenue of $19.5 billion and earnings of $1.22 per share, according to CNBC.
Brian Mulberry, client portfolio manager at Zacks Investment Management, also highlights Citigroup's 35% jump in investment banking revenues, which confirm the trend of more investment banking activity at the end of 2024.
"This shows that Jane Fraser is making positive strides in turning around the balance sheet, particularly flipping what was a net loss of $1.84 billion last year to net profit of $2.86 billion this year," he says. "There are still challenges for C to address but this is a strong indication that Citi is back on track."
Why Citigroup's new stock buyback program matters
Citigroup also announced that its board of directors authorized a multi-year $20 billion share repurchase program – equivalent to roughly 7% of its current market cap – which will begin in the first quarter of 2025.
Stock buybacks are another way for corporations to boost value for shareholders. As Kiplinger contributor Mark Hake explains in his piece on "What Is a Stock Buyback," a company "that buys back its shares will produce a higher stock price because as its shares count falls, it forces the price higher."
Hake goes on to explain "that effect produces more value for shareholders, as they pay no taxes on this unrealized gain (until they sell shares)."
Is Citigroup stock a buy, sell or hold?
Citigroup has turned in a stellar performance on the price charts over the past 12 months, up 48% on a total return (price change plus dividends) basis vs the S&P 500's 24% gain. And Wall Street is bullish on the member of the Berkshire Hathaway equity portfolio.
According to S&P Global Market Intelligence, the average analyst target price for Citigroup stock is $84.64, representing implied upside of nearly 10% to current levels. Additionally, the consensus recommendation is a Buy.
Financial services firm CFRA Research is one of those with a Buy rating on the financial stock, along with an $83 price target.
"Citi is executing on its strategy, and we like how the bank is positioned for growth across institutional markets," wrote CFRA Research analyst Kenneth Leon in a January 8 note to clients. "C has a leading franchise in corporate treasury services, technology platforms, and expanded global wealth. We think the bank is doing a good job delivering transparency and consistency in its operating results."
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