Will Citigroup Be Attractive after the Fed’s Decision?
Goldman Sachs on Citigroup
In the previous part of this series, we discussed that Goldman Sachs (GS) has a bullish view on the financial sector. Citigroup (C) is one of the firm’s top financial stock picks. The Fed is sounding more hawkish in regards to a March rate hike. After Yellen’s speech at the Executives’ Club of Chicago, market participants believed the probability of a rate hike had risen.
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Leading US investment firm J.P. Morgan (JPM) recently said that the market rally may pause due to a more hawkish tone from the Fed. J.P. Morgan wrote, “the recent hawkish shift by the Fed (March hike probability spiked to 96% from 40% in the last week) could pressure the already high S&P 500 (SPY) (QQQ) equity multiple of 18.6x.” However, the firm believes that there will be a short-term pullout. After this short-term retrenchment, the stronger economic fundamentals could drive market movement. Goldman Sachs believes that if the Fed raises its key interest rate at the March meeting, then it will benefit various financial stocks (XLF).
Citigroup (C) is currently trading at $61.11. Its 52-week high is $62.53 and 52-week low is $38.31. The stock returned nearly 1% on a year-to-date basis as of March 8, 2017. Over the last one year, the stock returned nearly 47.7%. The stock is currently trading at a price-to-earnings multiple of 13.0x. Citigroup’s 2017 estimated price-to-earnings ratio is 11.8x. The dividend yield is 1.1%.
The stock is currently trading at 2% above its 20-day moving average and 7.8% above its 100-day moving average. On August 4, 2016, its 20-day moving average crossed its 100-day moving average in an upward direction. Since August 4, 2016, the stock rose nearly 39.3% as of March 8, 2017.
In the next part of this series, we’ll analyze mutual fund and hedge fund positions in financial stocks.