Is It Too Late to Consider Citizens as Shares Surge After Solid Q1 Earnings Growth?

If you are on the fence about Citizens Financial Group, you are definitely not alone right now. Whether you have held the stock through its ups and downs or are considering jumping in, the latest price action has caught plenty of attention. Shares have climbed 0.8% over the last week, gained 4.1% in the past month, and are sitting on an eye-catching 23.4% return since the start of the year. Looking at a longer timeframe, the numbers become even more impressive, with 35.8% growth over the last year and a staggering 139.3% gain in five years. This kind of long-term outperformance helps explain why so many investors are considering Citizens as more than just another bank stock.

Much of this momentum traces back to shifting attitudes around the financial sector following recent market developments. These have pushed risk perceptions lower and highlighted the resilience of established regional banks. Of course, anyone can list the gains, but the real question for investors is whether there is still value to unlock, or if the current run has already priced in all the upside.

On that front, Citizens Financial Group’s value score is 2 out of 6, meaning it qualifies as undervalued in only a third of the valuation checks we track. However, scores rarely tell the full story. In the next section, we will break down those valuation approaches and share an even sharper perspective for thinking about what Citizens stock is really worth.

Citizens Financial Group scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Citizens Financial Group Excess Returns Analysis

The Excess Returns model evaluates a company by considering how much return it generates above its cost of equity, rather than just looking at its earnings or cash flows. By focusing on the value added beyond what investors demand as compensation for risk, this approach provides a more refined picture of long-term health and profitability.

For Citizens Financial Group, the Excess Returns analysis shows the following key details:

• Book Value: $53.43 per share
• Stable EPS: $4.91 per share (Source: Weighted future Return on Equity estimates from 14 analysts.)
• Cost of Equity: $4.83 per share
• Excess Return: $0.08 per share
• Average Return on Equity: 8.35%
• Stable Book Value: $58.83 per share (Source: Weighted future Book Value estimates from 10 analysts.)

Based on these figures, the model calculates an intrinsic value for Citizens shares that is 11.0% above the current share price. This suggests the stock is undervalued relative to what the company should be worth, considering the steady profitability above its equity cost.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Citizens Financial Group.

Our Excess Returns analysis suggests Citizens Financial Group is undervalued by 11.0%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Citizens Financial Group Price vs Earnings

The price-to-earnings (PE) ratio is a widely used valuation metric for profitable companies like Citizens Financial Group because it directly links the company’s share price to its earnings power. For banks and other established firms, the PE ratio helps investors quickly see how much they are paying for each dollar of profit. This makes it especially useful when consistent earnings are in place.

A "normal" or "fair" PE ratio depends significantly on the company’s expected growth and risk profile. Generally, higher growth prospects or lower risk result in a higher PE, as investors are willing to pay more for future earnings. On the other hand, riskier or slower-growing companies typically trade at lower multiples. Citizens Financial Group currently trades at a PE of 16.0x, which is above the bank industry average of 11.8x and its peer average of 12.3x. At first glance, this could suggest the stock is comparatively expensive.

However, Simply Wall St’s "Fair Ratio" for Citizens is 17.1x. This proprietary metric takes into account not just industry comparisons but also factors such as the company’s growth outlook, profit margins, size, and specific risks. Because it is tailored to the unique qualities of Citizens, the Fair Ratio may provide a more accurate picture than only looking at generic industry multiples or peer averages. With the stock’s current PE nearly matching its Fair Ratio, this indicates that Citizens Financial Group’s valuation is in line with what would be expected given its individual circumstances.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Citizens Financial Group Narrative

Earlier we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply the story you believe about a company, a perspective that connects your expectations for its future revenue, earnings, and margins to what you think it’s really worth. Instead of just tracking numbers, Narratives give you a clear framework for linking the company’s business outlook, your own financial estimates, and the resulting fair value you see for the stock.

On Simply Wall St’s Community page, you can easily build and browse Narratives, used by millions of investors, to see how different stories or scenarios could impact your investment decisions. Narratives let you compare the fair value you calculate based on your beliefs with the current market price, helping you decide whether it’s time to buy, sell, or hold. The best part? Narratives update dynamically whenever major news or earnings reports are released, giving you a living picture of the company, not a static snapshot.

For example, some investors’ Narratives for Citizens Financial Group assume rapid growth from digital banking and efficiency initiatives, which some believe justify the highest analyst price target of $65 per share. Others focus more on regulatory and real estate risks, leading to a much more conservative fair value closer to $51. Narratives allow you to explore these perspectives and shape your own, powered by both data and your unique view of the business.

Do you think there's more to the story for Citizens Financial Group? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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