Citigroup Beats On The Top And Bottom Lines

Citigroup, Inc. (Ticker Symbol: C) helped kick off this quarter’s earnings season beating the street’s expectations for earnings and revenue. The American multinational investment bank and financial services company reported an earnings per share beat of $1.97 per share vs. Wall Street’s analysts expectations of $1.95 per share.  Additionally, Citi reported a slight revenue beat of $18.6 billion vs. $18.545 billion that Wall Street’s analysts’ were looking for.

The company’s fixed-income, currency, and commodities (FICC) trading revenue — a metric looked at by many analysts as a key metric for the banks revenue generation — came in at $3.211 billion vs. Wall Street’s analysts’ expectations of $3.09 billion. Net interest margin and net interest income were both down on the quarter. Net interest margin was reported at 2.56% vs. 2.66% that the street was expecting. Net interest income also disappointed coming in at $11.64 billion vs. Wall Street analysts’ expectations of $12.15 billion.

The above image is a shorter-term daily chart of Citi’s stock over roughly the past two years.  Citi’s stock started off in the first quarter of 2018 trading positively and putting in a slight overbought reading in the Relative Strength Index (RSI).  The stock came off from those levels and began to grind lower over the course of the next two quarters. Citi’s stock started to see some life in the third quarter of 2018 but that was quickly over when a poor earnings and guidance report from the fourth quarter sent the stock charging lower.

Citi’s stock found some support just under the $50.00 price level while having an extremely oversold reading in its Relative Strength Index and putting in a v-shaped reversal in the first quarter of 2019. The stock found some dynamic price support right around its 100-day moving average in the second quarter of 2019. Since then the stock has been trading in a ten-month long trading range between the prices of roughly $60.00 and $72.50. The stock has yet to break out from its range in either direction but Citi is positive for the year and trading above both its 100- and 200-day moving averages.

(Chart above courtesy of ​​)

Based on a survey of five analysts offering 12-month price targets, the average price target for Citigroup stock is $76.20. According to that number, the stock is priced at a discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $70.51.

Earlier this year, Morgan Stanley raised its dividend to .35 cents per share from .30 cents per share, which shows a 16% increase.  The company also increased its share buyback program, bringing the total up to $6 billion.  Long-term investors are being rewarded for holding Citi’s stock through capital appreciation and its yearly payouts through dividends.

Investors in the financial space should look to competitor Morgan Stanley’s (Ticker Symbol: MS) earnings release on October 17th for fresh news within the sector.


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