Citizens Financial Shares Dip Despite Strong Earnings and Ambitious Outlook
The regional bank beat Q4 estimates, announced a dividend hike and new buyback plan, while forecasting over 30% earnings growth for fiscal 2026.
Shares of Citizens Financial Group (CFG) slipped in early trading Wednesday, even as the regional banking powerhouse reported fourth-quarter earnings that surpassed analyst expectations and unveiled an aggressive growth forecast for the coming years.
The seemingly paradoxical stock movement, with shares declining about 1.7% to $59.81 in a potential 'sell the news' reaction, comes after a strong run-up in the company's stock, which is trading near its 52-week high of $62.16.
Citizens reported Q4 diluted earnings of $1.13 per share, comfortably beating the Wall Street consensus of $1.11 and marking a 36% increase from the prior year. Revenue for the quarter landed at $2.16 billion, representing a 2.7% beat over estimates.
More significantly, the Providence, Rhode Island-based bank issued a robust long-term outlook for fiscal 2026, signaling deep confidence in its operational strategy. The company projects it will achieve an earnings per share figure exceeding $5.00, which would represent growth of more than 30% compared to its 2025 results. Management is forecasting Net Interest Income (NII) growth of 10-12% and a 6-8% expansion in noninterest income through 2026.
Underscoring this optimistic forecast, Citizens' board announced two significant moves to boost shareholder returns. The company declared a quarterly dividend of $0.46 per share, a 9.5% increase. It also authorized a new share repurchase program, with plans to buy back between $700 million and $850 million of its common stock.
"Our strong fourth-quarter and full-year 2025 results demonstrate the power of our strategy and our ability to perform in a dynamic operating environment," said Bruce Van Saun, Chairman and CEO of Citizens, in a statement. "We are well-positioned to deliver market-leading growth and top-tier returns."
The market's muted reaction appears to reflect the high expectations that were already priced into the stock. In the weeks leading up to the announcement, analysts had shown increasing optimism. On January 5, Barclays upgraded CFG to "Overweight", citing its growth outlook. Just days before the earnings release, Goldman Sachs raised its price target on the stock to $73.
Investors will now be closely watching for further details during the company's scheduled investor call. Analysts are expected to press management for specifics on the drivers of the ambitious NII growth targets, particularly in the context of the broader interest rate environment. The bank's strategy for managing expenses and loan-loss provisions will also be a key area of focus as stakeholders weigh the credibility of its path to generating over 30% earnings growth.
According to the company's 8-K filing with the SEC, the results and forward-looking statements reflect a strong capital position and a strategic focus on core banking services, wealth management, and digital offerings.