Q1 Preview: Mixed Reports Put Citi (C) on Shifty Ground into Earnings
3:34 pm ET 04/15/2011- StreetInsider
Citigroup, Inc. (NYSE: C) shares are trading lower Friday ahead of the company's first-quarter earnings report, expected out before the market opens on Monday, April 18th. Shares are down 0.5 to $4.41.
Citi is expected to report EPS of $0.09 on sales of $20.55 billion. For its fourth-quarter, Citi reported EPS of $0.04 on revs of $18.37 billion, both missing consensus estimates. Looking back at the first quarter of last year, Citi posted EPS of $0.15 on revs of $25.42, a beat on the top and bottom lines for the bank.
Shares dropped 9.8 percent through the quarter and is flat since. Citi finished 2010 about 39 percent better.
Citi is currently trading at a forward P/E of 8.3x FY12 EPS estimates, compared with 7x at BofA (NYSE: BAC), 8x at J.P. Morgan (NYSE: JPM), and 8.4x at Wells Fargo (NYSE: WFC).
Data from Bloomberg has 16 analysts with a Buy on Citi, 9 with a Hold, and three suggesting to Sell. The analyst price target average is $5.70, with a high of $7 and low of $4. Shares have traded in a range of $5.15 - $3.53 over the last 52-weeks.
Investors will probably be watching for changes to trading revenue and credit trends from Citi. Last quarter, Citi reported a 26 percent drop in equity market revenue; credit losses fell about 10.5 percent to $6.85 billion.
Analyst Summary:JPMorgan is looking for Citi to report EPS of $0.11, down 8.3 percent from the firm's previous estimate of $0.12 per share. JPMorgan noted Citi trades at 1.1x tangible book value, below peer averages. The firm said, "Performance should improve gradually, led by continued expansion of revenues overseas, especially emerging markets; recovery in net interest income; slower expense growth; slowing, albeit still high, credit losses; and shrinkage of Citi Holdings."
JPMorgan is retaining its Overweight into earnings "due to relatively attractive valuation at current levels given the substantial increase in capital, sizable amount of loan loss reserves, and potential for faster growth from emerging markets. However, Citi s earnings remain under pressure near term along with the industry due to still relatively high credit-related costs."
Deutsche Bank sees EPS of $0.09. Deutsche said expenses in the first-quarter should decline, but will remain elevated from investment spending. Deutsche commented: "For example, its international retail banking investments, which it feels are the furthest along, will continue through 1H11 "suggesting better operating leverage is farther away. Overall, there s still about $2-4b left to of investments in the consumer businesses (over a few years), along with investments in corporate banking (in tech, equities platform, etc.), and $1b of annual tech spend in Transaction Services."
The firm is looking for about a 10 percent increase in sales growth sequentially on a 35-40 percent decline in trading revenue. Deutsche Bank mentioned this level would be a larger decline compared with peers based on tough comps and a smaller concentration in commodities.
Detusche said "while Citi Holdings asset runoff is expected to slow, we still think good progress will be made in 1Q (we est $9b of runoff in Local Consumer Lending and $8-10b in the Special Asset Pool)."
Goldman Sachs is looking for an overall improvement versus the fourth quarter, due mostly to improvement in capital markets and normalization in operating expenses and credit costs. Goldman sees Citi reporting EPS of $0.10, up from its previous estimate of $0.09.
Raymond James also recently made bullish comments on banks into earnings, saying Citi has established positive credit quality trends and is likely to maintain strong EPS momentum.Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of the release.
It will be .17 cents or over stock will hit $5.00 Monday.
There is no way Pandit announced R/S knowing they were going to have a weak quarter. I say it will be a blowout # and stock up 10%
How did you come up with your estimates? You must be expecting revenue in excess of 25b because thats the only was to get higher than .13 or so. Expenses are pretty static if not on the rise, loan losses will drop but enough to make up for the extra eps you are forecasting. I would love to see a huge beat but it has to be based on real forecasts not wishin and a hopin.
After comparing BAC and JPM 1Q results to prior periods. I am gong with a minimum of .11 to a maximum of .14 eps. Wildcard is Revenue from foreign operations, could be a big positive given exchange rates. Monday at 8:00am!
Even Wall Street is finding it hard to guess that! I believe, it will be a bit better and the guidance will also be exciting. If the bank did not see better time ahead why would they even announce that the dividend payment will begin, whatsoever small!! Let the idiots doubt that!!
I love Peter Paul and Marvin
Keep this in mind, on whisper earnings.com they had BAC at 33 and and the consensus at 27 as you know it was much lower 18 or something.
They do not have a whisper number posted for C but the consensus is 9 for what that is worth.