Citigroup stock falls for the 12th session in a row as bank yields decline: time to buy?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Jun 18, 2021
  • Citigroup shares look set to extend the current run of declines to a 12th straight.
  • The company’s stock fell 1.81% on Friday amid falling bank yields.
  • Fed’s Jim Bullard says he sees the first interest rate hike since Covid coming in 2022. Time to buy C stock?

Citigroup Inc. (NYSE:C) stock ended the week on a losing run of 12 days as investors continued to dump bank stocks. Although the Federal Reserve seemed optimistic in the latest monetary policy update, bank yields continued to fall. 

Fed chair Jerome Powell said earlier this week that he expects the US economy to perform better than expected next year. And on Friday, Jim Bullard echoed those remarks by telling CNBC he sees the first rate hike since covid coming in 2022.

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So, generally, there is optimism in the market, except for bank yields. It means bank stocks could rebound significantly in the coming quarters.

Citigroup fundamentals 

Citigroup stock’s recent decline values it at an attractive 9.44 price-earnings ratio. Its forward P/E is slightly better at 8.35. Analysts expect earnings to grow at a compound annual growth rate of about 10% for the next five years. It prices the stock at a PEG ratio of just 0.87. 

Therefore, from a valuation perspective, Citigroup shares look massively undervalued. 

And with bank yield likely to rise ahead of a potential rate hike next year, this could be the perfect time to buy Citi stocks. The company’s shares also trade at an attractive price-cash ratio of 0.14 is also appealing to value investors, while dividend investors will look at the current dividend yield of about 3.02%. As such, Citigroup stock looks like an attractive option to many types of investors, putting it in a perfect position to bounce back.

Source – TradingView

Technical overview

Technically, C shares appear to have recently pulled back to make a bearish breakout from an ascending channel formation. It shows an abrupt change in the market sentiment triggered by falling bank yields and rising inflation.

Bullish investors can target potential rebounds at about $73.01 and $80.19. On the other hand, investors targeting extended pullbacks can target profits at approximately $62.71 and $57.37.

Bottom line: Citigroup stock looks poised for a rebound

In summary, Citi shares have pulled back to trade at attractive valuation multiples. While bank yields have declined recently, they could bounce back soon amid increased market optimism. It creates the perfect situation for bank stocks to bounce back. Citigroup could be a good target for investors targeting rebounds.

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