Citigroup (C): Restructuring and Growth Potential

Citigroup $C under the leadership of Jane Fraser, is undergoing a major transformation aimed at simplifying operations, improving efficiency and strengthening key segments. This restructuring, coupled with an undervalued stock, suggests the potential for significant growth in the years ahead.

Key points of the restructuring

1. Focus on five key divisions

- Withdrawal from 14 consumer markets and focus on Global Services, Investment Banking a credit cards.

- Strengthening market leadership in international payments and financial transactions.

2. Efficiency and return on capital

- Return on tangible capital should increase from the current 7% to 11-12% by 2026.

- Earnings per share of $C could reach $10 by 2026 , a significant improvement from the $7 expected in 2025.

Undervaluing the stock

- $Cstock is trading below its tangible book value ($90 per share), which is unusual compared to peers such as JPMorgan Chase, which trades at 2.5 times that value.

- Despite 40% growth in 2024 there is still room for the stock to double in value over the next three years.

Competitive advantages

- Innovation and flexibility: $C focuses on process optimization and strategic investments, which allows it to respond better to market changes than some competitors.

- Global coverage: Leadership in international payment services and diversified revenues from key areas.

- Strong leadership: Jane Fraser has set a clear strategic vision and emphasizes growth and shareholder returns.

Analytical insight

- Wells Fargo analyst Mike Mayo named $C as his top pick for 2025, highlighting significant improvements in profitability and return on capital.

- The broad consensus suggests Citigroup has the potential to become an attractive opportunity for investors looking for an undervalued stock with long-term growth potential.

Summary

Restructuring Citigroup $C under Jane Fraser's leadership represents a critical step toward restoring the bank's competitiveness in the global marketplace. The undervalued stock, strategic focus on key segments, and positive outlook for profitability suggest significant growth potential. If Citigroup meets its objectives, it could become one of the most attractive investment opportunities in the banking sector by 2026.