Citigroup (C -0.41%) did not distinguish itself during the Great Recession. It got caught up in the housing crisis, ending up cutting its dividend and taking a government bailout.
A lot has changed since that nadir, but is this iconic bank worth buying right now? That's not exactly clear.
Citigroup gets back on track
After the business struggled through the recessionary period between 2007 and 2009, management had to make some big changes. It wasn't a pretty period for the company or for its shareholders.
In fact, the stock remains down about 80% from its highs before the Great Recession. The dividend, which is growing again, is nowhere near where it was before the cut.
Image source: Getty Images.
So it wouldn't be shocking for investors to think there's a long-term opportunity here for Citigroup to regain its former glory. Only it isn't the same bank it was before the Great Recession. In fact, it has been focused on simplification, with a core goal of reducing risk.
That's not to suggest that the business isn't large and diverse; it's still both. But the fall from grace left management with a more conservative bias.
Citigroup is more boring and more reliable today
Compared to 2007, Citigroup is kind of a boring bank right now. That's not bad, but it changes the perspective a little for investors. So, why did the stock rally more than 60% during the past 12 months? The dividend yield, while still attractive compared to the broader market, has fallen from 3.7% to a bit more than 2.6%.
Part of the answer is that the bank's financial performance has improved materially during the past year. For example, revenue rose 8% year over year in the second quarter of 2025, while net income jumped 25%. That's not bad, and it is reasonable for investors to be excited about that.
However, there's a caveat. Between the first and second quarters of 2025, the bank's performance was much less exciting. Revenue was little changed, and net income fell roughly 1%. That's not terrible, per se, but it certainly isn't as exciting as the year-over-year performance.
And now, consider some traditional valuation metrics. Citigroup's price-to-sales, price-to-earnings, and price-to-book-value (P/B) ratios are all above their five-year averages. In fact, they are materially above their long-term figures, highlighted by the P/B ratio of 0.85 versus a five-year average of 0.6.
All in, it looks like investors have priced in a lot of good news during the past year, but that the good news isn't quite as good as it had been.
It isn't a bad bank, but it looks a bit expensive
Citigroup is in a much stronger position than it was before, which is good. And, generally speaking, it is a well-respected bank. That's not the problem.
The problem is that the huge stock advance seems to have baked in a lot of good news. For investors who care about value, Citigroup is probably not going to be a good option right now.
