The financial services market is experiencing rapid growth, driven by automation, blockchain adoption, real-time finance, self-service models, emerging financial applications, and disruptive fintech innovations. Workforce evolution and microservices further enhance efficiency and adaptability.

In this dynamic landscape, fundamentally strong financial stocks like Citigroup Inc. (C), Deutsche Bank Aktiengesellschaft (DB), and Navient Corporation (NAVI), present compelling investment opportunities with attractive valuations.

The financial sector is thriving by leveraging global economic shifts, offering diversification opportunities for investors. Foreign and money-center banks with international portfolios benefit as intermediaries or through financial hedging and risk management. Likewise, Statista projects the global finance market’s revenue to grow at a 9.1% CAGR, reaching $2.89 trillion by 2029.

Simultaneously, the enterprise financial services sector is booming, driven by AI-powered digital transformation. AI enhances decision-making, operational efficiency, and accuracy in areas like underwriting, investment forecasting, and cybersecurity. Notably, the Global Banking and Financial Services market is projected to expand at a 7.9% CAGR through 2030.

Additionally, easing regulations are fueling a surge in global mergers, acquisitions, and IPOs, presenting lucrative opportunities. Considering these conducive trends, let’s analyze the fundamental aspects of the three featured financial services stocks.

Citigroup Inc. (C)

C is a global, diversified financial services holding company offering various financial products and services to consumers, corporations, governments, and institutions. It operates through five segments: Services, Markets, Banking, U.S. Personal Banking, and Wealth.

On November 12, 2024, C and Bank of Shanghai launched a groundbreaking payment solution for the TourCard, enabling international travelers to make seamless and cost-efficient mobile payments in China using C’s USD Clearing and Swift Go services. This innovation simplifies adding funds and enhances the payment experience for overseas visitors.

On October 28, 2024, C announced a strategic partnership with Google Cloud to modernize its technology infrastructure and enhance innovation using AI. The collaboration includes migrating workloads to Google Cloud and leveraging Vertex AI for generative AI capabilities.

In terms of forward non-GAAP P/E, C’s 11.74x is 4.5% lower than the 12.29x industry average. Similarly, its 1.63x forward Price/Sales is 44.9% lower than the 2.97x industry average. Also, its 0.68x forward Price/Book is 44.4% lower than the 1.23x industry average.

C’s total revenues for the third quarter, which ended on September 30, 2024, rose marginally year-over-year to $20.32 billion. Its net income also grew slightly year-over-year to $3.24 billion. Additionally, its book value per share increased by 2.2% year-over-year, reaching $101.91.

Analysts expect C’s EPS and revenue for the quarter ended December 31, 2024, to increase 46.5% and 11.4% year-over-year to $1.23 and $19.42 billion, respectively. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, C’s stock has gained 31.9% to close the last trading session at $69.94.

C’s POWR Ratings reflect its strong fundamentals. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

It has a B grade for Value and Momentum. It is ranked first out of 9 stocks in the Money Center Banks industry. Beyond what we stated above, we also have given C grades for Growth, Stability, Sentiment, and Quality. Get all of C’s ratings here.

Deutsche Bank Aktiengesellschaft (DB)

Headquartered in Frankfurt am Main, Germany, DB is a stock corporation offering corporate and investment banking, along with asset management products and services, to private individuals, corporate entities, and institutional clients worldwide. It operates through its Corporate Bank, Investment Bank, Private Bank, and Asset Management segments.

In terms of forward Price/Sales, DB is trading at 1.07x, which is 63.8% lower than the 2.97x industry average.

DB’s total net revenues for the fiscal third quarter ended September 30, 2024, increased 1.3% year-over-year to €7.50 billion ($7.74 billion). The company’s profit attributable to shareholders rose 41.7% from the prior-year quarter to €1.46 billion ($1.51 billion). Additionally, its EPS reached €0.81, marking a 44.6% year-over-year increase.

Street expects DB’s revenue for the quarter ended December 31, 2024, to increase 4.2% year-over-year, reaching $7.54 billion. Over the past year, the stock has gained 26.1% to close the last trading session at $17.16.

DB’s POWR Ratings reflect its bright prospects. It has an overall rating of B, which translates to a Buy in our proprietary rating system.

DB has a B grade for Value, Momentum, Stability, and Sentiment. It is ranked #6 out of 91 stocks in the Foreign Banks industry. To access the additional ratings of DB for Growth and Quality, click here.

Navient Corporation (NAVI)

NAVI provides technology-enabled education finance and business processing solutions for education, health care, and government clients in the United States. It operates through three segments: Federal Education Loans, Consumer Lending, and Business Processing.

In terms of forward Price/Book, NAVI’s 0.51x is 58.1% lower than the 1.23x industry average. Likewise, its 2.47x forward Price/Sales is 16.6% lower than the 2.97x industry average. Its 5.56x forward non-GAAP P/E is 54.8% lower than the 12.29x industry average.

During the nine months ended September 30, 2024, NAVI reported total interest income of $2.95 billion. The company’s core earnings-based net income and EPS for the quarter were $246 million and $2.20, respectively. As of September 30, 2024, NAVI’s total liabilities stood at $50.75 billion, down from $60.52 billion as of September 30, 2023.

For the quarter ended December 31, 2024, NAVI’s EPS is expected to increase 20% year-over-year to $0.25. The stock has declined 9.4% over the past six months to close the last trading session at $13.06.

NAVI’s POWR Ratings reflect a favorable outlook. It has an overall rating of B, which translates to a Buy in our proprietary rating system.

It has a B grade for Value and Quality. It is ranked #8 out of 83 stocks in the Financial Services (Enterprise) industry. To see NAVI’s Growth, Momentum, Stability, and Sentiment ratings, click here.

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C shares fell $0.03 (-0.04%) in after-hours trading Friday. Year-to-date, C has gained 0.87%, versus a 1.00% rise in the benchmark S&P 500 index during the same period.

About the Author: Abhishek Bhuyan

Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments. More...

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