Investors who have owned stocks in the last year have generally experienced some big gains. In fact, the SPDR S&P 500 ETF Trust (NYSE: SPY) total return over the last 12 months is 23.9%. But there is no question some big-name stocks performed better than others along the way.
Citigroup’s Bumpy Ride: One company that has been a disappointing investment in the past year has been U.S. megabank Citigroup Inc (NYSE: C).
While other bank stocks outperformed in 2021, Citigroup lagged even in an environment of rising interest rates, elevated financial market trading activity and impressive loan growth.
Citigroup’s new CEO Jane Fraser is orchestrating an aggressive restructuring initiative, which includes Citigroup exiting its consumer banking businesses in 13 global markets. This part of the restructuring is projected to free up about $7 billion in capital for Citigroup. Unfortunately, the first two exits in Australia and South Korea didn’t exactly go smoothly. The Australian exit resulted in a $680 million pre-tax loss in the third quarter of 2021. Citigroup said its South Korea wind-down would result in up to a $1.5 billion charge.
Fortunately, there are still plenty of things to like about Citigroup in 2022. The stock is trading at just 8.3 times forward earnings and 0.72 times book value, making it one of the most compelling value plays in the market. In addition, the company’s investor day event in February could help reassure investors about the company’s restructuring and long-term outlook.
At the beginning of 2020, Citigroup shares were trading at $80.13. By the beginning of March, the stock was trading at around $64 as news of the coronavirus spreading in China prompted concerns about a U.S. pandemic.
When the market crashed during the U.S. COVID-19 outbreak in March, Citigroup shares dropped as low as $32 during the height of the pandemic fears.
When the market bounced off pandemic lows, Citigroup began to rebound as well. The stock recovered to as high as $62.47 in June 2020 before its recovery rally stalled. Citigroup shares traded all the way back down to $40.49 by late October.
Citigroup In 2022, Beyond: Citigroup finished 2020 back above $60 and rallied to a new post-pandemic high of $80.29 in June 2021 before its recovery stalled once again. After pulling back to $57.59 in December, Citigroup is currently trading at $65.62.
Citigroup investors who bought one year ago and held on hoping for a big 2021 performance have generated a lackluster return on their investment at this point. In fact, $1,000 in Citigroup stock bought on Jan. 10, 2021, would be worth about $1,037 today, assuming reinvested dividends.
Looking Ahead: Analysts are expecting more action from Citigroup in the next 12 months. The average price target among the 23 analysts covering the stock is $76, suggesting a 15.8% upside from current levels.
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