Citigroup Q4 Earnings Preview: Turnaround Momentum in Focus

Citigroup is scheduled to report its Q4 2024 earnings on January 15 before the market opens. Analysts expect EPS of $1.24, reflecting a robust year-over-year growth of 47.6%, and revenue of $19.6 billion, up 12.1%. The bank has seen modestly positive revisions to these estimates during the quarter, a testament to improving sentiment.

Citi has outperformed earnings expectations in its past three quarters, and this release will test whether CEO Jane Fraser's ongoing turnaround efforts are gaining traction. With shares trading at a steep discount to tangible book value and analysts projecting continued earnings acceleration into 2025, expectations are high, though tempered by skepticism about execution.

Analysts view Citi as a standout value play among major banks, with Wells Fargo's Mike Mayo and Keefe, Bruyette & Woods naming it a top pick for 2025. Mayo recently raised his price target to $110, citing potential for Citi’s stock and earnings to double in three years under all but recessionary conditions. The stock’s valuation, at a forward P/E of 8x for 2025-2027, appears incongruent with its projected 26% EPS growth over the same period. Fraser’s efforts to streamline operations into five business lines, cut 20,000 jobs by 2026, and focus on core profitability metrics like return on tangible common equity (ROTCE) are seen as critical to closing this valuation gap.

Fraser’s turnaround plan has garnered praise but remains under intense scrutiny, with ROTCE improving to 7% in Q3 but still trailing peers like JPMorgan Chase (19%) and Bank of America (13%). Analysts, including those at Barclays and RBC, are watching closely for updates on cost management, capital markets activity, and expense discipline in this report. A key narrative for Citi is its potential to capitalize on a more favorable regulatory environment and increased capital markets activity, which could drive revenue growth and P/E multiple expansion in 2025 and beyond.

While Citi shares have gained nearly 24% over the past year, they remain far below pre-pandemic highs and continue to trade at a 20% discount to tangible book value. This dichotomy highlights both the challenges and opportunities Fraser faces as she leads the bank's most significant restructuring in five decades. With consensus projecting 2025 EPS of $7.33 on $82.2 billion in revenue, analysts are optimistic about Citi’s medium-term growth trajectory. However, this earnings report will be a pivotal moment for Fraser and her team to demonstrate that Citi’s transformation is more than just a promise, but a reality, solidifying its place as a potential top performer in the banking sector for 2025.