Citigroup

Methodology

Citigroup's global banking operations create cyclical earnings sensitive to credit conditions, emerging market exposures, and regulatory costs from its complex international footprint. The company's ongoing simplification and exit from non-core markets aims to improve profitability and capital returns. This calculation requires normalized earnings assumptions—Citi's transition period and historical underperformance make simple extrapolations unreliable without assessing restructuring progress and normalized ROE potential.

Methodology

Citigroup's PEG ratio often appears attractive given persistent valuation discounts to peers, but this reflects execution concerns, regulatory overhead, and lower returns on tangible equity. The company's potential for improvement under new management justifies some optimism, but track record issues temper valuations. For Citigroup, price-to-tangible-book value relative to ROE improvement trajectory provides better insight than PEG, as restructuring success matters more than near-term growth rates.

Methodology

Citigroup's dividend yield (typically 3.0-5.0%) provides meaningful return while the bank works through its restructuring and regulatory challenges. The company's capital return capacity has been constrained by regulatory requirements and internal control issues, but improving profitability should enable increased dividends. PEGY is relevant for Citi investors betting on turnaround potential, though dividend growth depends on successfully executing the simplification strategy and improving underlying returns.