Citi now earns above 11% on tangible equity and should clear about $12.70 of 2027 operating earnings. At ten times that, the shares belong near $130, a market-like return from $125.
Key points
- $2.85 third-quarter EPS, 11.5% return on tangible common equity, revenue $23.8 billion.
- Above 11% full-year 2026 return target, card losses guided to about 4%.
- $101.59 tangible book; the stock trades at 1.23 times that book and about 10 times my 2027 earnings.
The call
The $125 share price requires about $12.50 of 2027 operating earnings at ten times, or a 12% return on today's $168 billion of tangible common equity. That is the midpoint of management's 11-13% 2027-2028 window.
I model $12.70 of operating earnings as Services, Wealth and cards compound and Markets fade in a normal fourth quarter. Ten times that is $130. Banamex's $9 billion currency loss hits GAAP in early 2027 but is slightly accretive to capital.
Citigroup diluted EPS by quarter ($)Company releases through Q3 2026; Q4 2026E and 2027E are mine
Valuation
| Item | Figure |
|---|
| 2026E operating EPS | $11.20 |
| 2027E operating EPS | $12.70 |
| Multiple | 10.2 times |
| 12-month target | $130 |
| Tangible book (Q3 2026) | $101.59 |
| Price / 2027E EPS | 9.8 times |
Large U.S. banks trade 11-14 times earnings. Citi still earns less than they do, so ten times is fair, not cheap. Upside is a 14% return if capital rules ease; downside is a 2027 GAAP hit and slower buybacks.
Risks
- CET1 minimum rises toward 12.1% in 2028 and buybacks slow below $3 billion a quarter.
- Card losses move above 4% or Mexico consumer losses keep building.
- Markets revenue falls more than 20% in the fourth quarter and stays weak.
What would change my mind
A 2027 operating return on tangible equity above 13% with CET1 still above 12.5% would support a higher multiple.