Is Citigroup Inc (C) A Value Play?

Citigroup Inc (NYSE:C) has long been hailed as the bank that delivers results. Citigroup did exceptionally well in passing the “Stress Test”; it passed with flying colors. The bank posted an 8.3% Tier 1 common-capital ratio, the highest in its respective industry. These tests show how banks would do under severe economic conditions.

This is just one of the many exceptional qualities that Citigroup possesses as of right now. In the past, Citigroup Inc (NYSE:C) also managed to gain a certain amount of negative press, but it has slowly started to recover from that. All of these signs point to recovery, and below are some additional reasons as to why Citigroup will skyrocket.

Dividend payouts

Many analysts are expecting Citigroup to announce a sizable dividend of more than $0.10/share. Citigroup certainly has the means to do so; it currently has approximately $400 billion in cash. With its dividend currently at $0.04, Citigroup is not attractive as a stock. Many other companies offer a much better payout.

Citigroup Inc (NYSE:C) has finally comprehended this and is most likely going to increase its dividend payout. Citigroup also has the means to initiate a share buyback program, which would in turn attract more investors. These are the two major reasons that would point to a much higher share price.

Fundamentals

Citigroup’s historic price chart displays the exhilarated price rise and fall, especially since 2008. But since then, Citigroups’s price has ameliorated far beyond anyone’s expectations. Citigroup Inc (NYSE:C)’s stock price has gone up $15.37/share, or 48.6%. The stock has not gone up on speculation but rather potential.

Wall Street expects Citigroup to continue to do exceptionally well in the coming days. Its earnings per share have risen quarter-over-quarter from $1.00 (July 16, 2012) to $1.06 (Oct. 15, 2012). For the past two quarters, Citigroup has also exceeded Wall Street expectations of $0.89/share and $0.96/share, respectively.

For the past three quarters, Citigroup Inc (NYSE:C)’s net income has tripled each quarter. Citigroup has a phenomenal balance sheet; its triumph at cutting costs, improved asset position and the probability of higher capital returns are all huge positives going forward.

Catalysts

I am sure that many of you know that Citigroup provides banking and investing services. With the housing market skyrocketing, it can experience more capital gains. Citigroup Inc (NYSE:C) has $481 billion in cash and cash equivalents. The bank is successfully cutting costs and improving its capital position. This should allow for an increase in its dividend, and for Citigroup to gain approval for its share-buyback program, which would be the first such program since 2007.