With shares of Citigroup (NYSE:C) trading around $43.50, is C an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for a Stock’s Movement

Citigroup provides consumer banking and credit, corporate and investment banking, securities, brokerage, wealth management and transaction services. The company and its corresponding sector have received a good amount of negative press over the last few years but they seem to be recovering. In any case, the financial sector is the backbone of the economy so look for this sector, along with its companies, to continue to see increased profits as the world gets back on track.

T = Technicals on the Stock Chart are Strong

Citigroup’s long-term price chart displays the euphoric rise into the mid-2000s and subsequent disastrous fall of 2008. Over the last few years, the stock has recovered a bit to price levels not seen since early 2011. Citigroup is currently trading near multi-year resistance so it may need to pause here before its next leg higher. So far, there looks to be constructive price action from Citigroup stock.

Evaluating a price trend can be efficiently done with the use of key moving averages. In fact, the key simple moving averages can provide insight into the trend and strength of the trend. What are the key moving averages? The 50-day, 100-day, and 200-day simple moving averages. With respect to Citigroup, the stock is currently trading above all of its key rising moving averages. This in turn signals a strong uptrend in the stock.

A relatively simple way to gain perspective into investor sentiment is through the use of the options market. More specifically, taking a look at the implied volatility and implied volatility skew levels of Citigroup options may help determine if investors are bullish, neutral or bearish. The implied volatility of Citigroup options is at 30.94 percent today which coincides with a 73rd percentile over the last 30 trading days and 33rd percentile over the last 90 trading days. What does this mean? This means that investors or traders are buying a significant amount of call and put options contracts, as compared to the last 30, and a good amount, as compared to the last 90 trading days.

The implied volatility skew of March and April put and call options is at about average. Now, what does this mean? As of today, there is an average demand from call and put buyers or average supply of call and put sellers, all neutral over the next two months. So, investors are buying a significant amount of call and put option contracts and are leaning neutral over the next two months, possibly signaling a pause in the stock.

E = Earnings Are Increasing Quarter-Over-Quarter

Earnings and revenue growth expectations are built into a stock price. So, Citigroup should see increasing earnings and revenue growth so that the stock price can rise. What do the last four quarterly earnings and revenue growth figures for Citigroup look like? The last four quarterly earnings growth (Y-O-Y) rates have been: -32.25, -87.8, -12.84, and -4.04 percent while the last four revenue growth (Y-O-Y) rates have all been: -1, -29.37, -11, and -3.04 percent. Citigroup has displayed negative earnings and revenue growth rates but are they better than expected?

Let’s see how the markets liked these numbers. The last four quarterly earnings announcement reactions help gauge investor sentiment on Citigroup’s stock. The last four quarters have seen next trading session returns of -2.91, 5.49, 0.6, and 1.76 percent. The markets have, for the most part, liked the earnings reports that Citigroup has given.

E = Excellent Relative Performance Versus Peers and Sector

Citigroup has been hurt over the last few years but how has the stock done relative to its peers and sector? Year-to-date, the stock is returning 9.63 percent while its competitors, Bank of America (NYSE:BAC), JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC) and sector are returning -2.99, 11.5, 2.48, and 4.65 percent respectively. Citigroup is that the front of the pack in regards to relative performance.


Citigroup is in an industry that is the backbone of the economy. The stock has performed well year-to-date, relative to its peers and sector. This performance can be seen in the positive momentum being displayed on its price chart. Lastly, investors have liked most of the earnings and revenue growth figures the company has posted. So, look for Citigroup stock to continue to OUTPERFORM.

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