Forget pricey JPMorgan: Is this turnaround bank the better rebound bet? RSS CTA

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With Citigroup (NYSE:C) expecting the Federal Reserve to hold off on rate cuts until June 2027, investors are sorting banks by who can keep earning while rates stay high. JPMorgan Chase (NYSE:JPM) is the usual answer, at nearly 14 times earnings, and Bank of America (NYSE:BAC) has barely moved in a year. 

Investors have been willing to pay for safety, but it’s Citigroup that gained 29.6% over that stretch and still trades at 11.4 times earnings.

That lower multiple shows lingering doubt about a bank still in the middle of a restructuring, and a monthly data-driven screen can test it against each new set of results. ProPicks AI, InvestingPro’s AI-driven stock-picking service, added Citigroup to its Beat the S&P 500 strategy for November. The bank shares that line-up with an online travel booking leader, a high-margin commercial biopharma company and a commercial jet-turbine maker.

Cutting Costs While the Services Franchise Grows

Citigroup’s latest quarter backed the turnaround plan with results. Earnings per share of $2.85 beat estimates by 7.5%, revenue rose 8% in the strongest third quarter for revenue in a decade, and return on tangible common equity (ROTCE) reached 11.5%, up 180 basis points from a year earlier. Management lifted its full-year ROTCE target to above 11%.

Most of that growth came from the units Citi is betting on. Services revenue grew 15% with a 31.2% ROTCE, Wealth revenue also rose 15% on $38 billion of net new investment assets, and equity capital markets revenue jumped 77%, helped by leading six of the largest equity deals of the quarter. Meanwhile the efficiency ratio improved to 58.5% from 64.7%, with more than $1 billion of severance booked this year and stranded costs trimmed to about a $100 million quarterly run rate.

Consumer cards remain the soft spot, with revenue flat as partner payments and rewards costs climb. Shares also fell 3.48% in premarket trading after the report, on caution over fourth-quarter markets seasonality and the pace of capital deployment.

Weighing the Discount Against the Returns Gap

Wall Street consensus estimates compiled on InvestingPro put 2027 earnings at $12.78 a share, which pushes the forward multiple below 10 times. InvestingPro data also show a PEG ratio of 0.26 for Citigroup, against 0.75 for Bank of America. Tangible book value per share rose 6% to $101.59, which puts the stock at about 1.2 times tangible book. Management has repurchased $13.3 billion of stock so far this year, more than all of 2025, and has raised its dividend for four straight years. The median analyst price target is $150.71, though earnings revisions over the past 90 days lean negative.

Some of that discount is deserved. ROTCE of 11.5% still trails JPMorgan’s 17% or more, which limits the premium investors will pay. A roughly $9 billion translation loss tied to the Banamex deconsolidation will hit earnings in early 2027, fourth-quarter markets revenue is expected to fall about 20% sequentially, and two consent orders remain open.

The Citigroup Pro Research Report shows how much of the valuation rests on tangible book value, how far the simplification cost targets have progressed and how fast the corporate Services business is growing.

Finding Turnarounds Before the Rebound Shows

Citigroup is an unloved turnaround with returns climbing, as management targets ROTCE of 11% to 13% in 2027 and 2028, and the shares trade near 11 times earnings while those targets are still ahead. A $30 billion buyback program is in place, and the planned Banamex IPO could release more capital for repurchases.

Turnarounds tend to be judged one quarter at a time, which is why ProPicks AI rebuilds its lists every month on the latest results. In the Beat the S&P 500 strategy, the bank keeps company with leaders in travel, pharmaceuticals and aerospace manufacturing, while the other strategies range from tech to mid-caps and Dow stocks. Full access to all ProPicks AI strategies costs $9 a month.

The author holds no position in the stocks mentioned. Data and financial metrics as of November 4, 2026.