Category: C

Restructuring a large investment bank is a complex matter. Whilst credible execution is a key ingredient, the CEO also needs a good measure of luck. By that I mean, a favorable macro environment that would support its business model profitability during the transition period. The key risk is a tailspin where a bank loses market share, revenue, and key rainmakers which ultimately manifests into a lack of profitability and loss of market confidence.

As an example, the restructuring of Deutsche Bank (DB) commencing in 2018 was an example where lady luck was smiling at the management team. Whilst DB’s CEO, Mr. Christian Sewing, clearly executed well on the cost side – suffice it to say, it hugely benefited from strong growth in FICC trading revenues during this period. Without the strong tailwinds from FICC trading, DB’s strategic turnaround may have faltered earlier on. The most recent volatility in DB, in my view, is not a cause for concern (although I managed my position to mitigate any risks given the recent price action).

On the flip side, Credit Suisse’s attempted restructure failed, in part, due to the bear market in 2022. Unlike its peers, CS investment bank is geared mostly toward credit markets and capital markets issuances. These were areas that were quite challenged in 2022. Similarly, CS’s areas of strength in leveraged finance, M&A, and SPAC deal activity were either loss-making or inactive. Whereas CS has little exposure to the booming FICC revenues. CS’s business mix meant that the IB was loss-making and therefore contributed to the general loss of confidence in this bank. It was death by a thousand cuts which finally culminated in a death spiral last week.

Citigroup’s Strategy

Citigroup’s (NYSE:C) strategy includes the divestment of its global consumer bank. Unlike the usually painful and prolonged restructuring of an Investment Bank, the disposal of consumer franchises is mostly achieved at a premium to its tangible book value and relatively quickly. In Citi’s case, that results in releasing of substantial capital whereas shareholders are still impatiently waiting for the announcement relating to the disposal of Banamex Mexico.

The other parts of Citi’s strategy include an accelerated and substantial investment in wealth management (especially in Asia) with the stated objective of building a leading global wealth management platform. Citi is also doubling up on investment in its crown jewel Services division comprising Trade and Transaction Services (“TTS”) and Security Services (“SS”).

Since announcing its strategic transformation in 2022, Citi certainly benefited from tailwinds in the Services division powered by higher interest rates:

As can be seen from above, Citi has grown the top line by a massive 27% year-on-year driven by both higher rates as well as increased volumes.

Citi also benefited in 2022 from the strong secular growth in FICC income and that is reflected in its Markets division:

Citi is #2 globally in FICC and it delivered strong growth of 13% year-on-year in 2022 (noting that 2021 was also a relatively strong year). The growth in Markets was largely offset by a decline of over 50% in IB fees (debt and equity underwriting and M&A advisory) predominantly due to the rapidly rising rates and frozen capital markets throughout most of 2022.

Citi’s Global Wealth Management (“GWM”) however delivered a relatively weak performance (down ~2% overall) in spite of significant investment in the hiring of relationship managers (“RMs”) globally.

The lackluster performance in 2022 was not a great surprise of course. The 2022 year was one of the worst years on record for the typical 60/40 bonds portfolio. This has a direct impact on lower AUMs and fewer investment activities by clients. However, these bear markets do not last forever and the strategic direction of the business is unaltered whereby Citi is continuing to invest heavily in RMs and its product platform.

The Implications Of Credit Suisse Collapse

Citigroup highlighted in its presentation it’s #5 globally in private banking and #3 wealth manager in Asia. There are no league tables in Asia published regularly, but it is common knowledge that CS and UBS (UBS) are its main western competitors in the wealth management space. The collapse of CS and its acquisition by UBS is clearly a golden opportunity for Citigroup both in terms of attracting top talent in the WM space as well as growing AUM.

Citi is benefiting in two major ways. Firstly, given the uncertainty in Swiss banking, key staff (including relationship managers) are deserting the ship and looking for opportunities elsewhere and Citi is likely to be the greatest beneficiary in Asia given its strong platform and position in Asia Wealth. Typically, when top-performing RMs are leaving, they take with them a substantial part of the AUM, they are managing, and some relationship managers oversee well over a billion in AUM.

In a recent Bloomberg interview, David Rubenstein asked Citi’s CEO Jane Fraser whether she is calling some of the great private banking relationship managers in CS and asking them to join Citi. Jane quipped back, “no, they are calling us”. Enough said.

Secondly, in the merger of two dominating Swiss banks such as CS and UBS, there will inevitably be some revenue dis-synergies or in other words, AUM outflows to competitors. It is very common for very wealthy clients to spread their AUM between several private banks, rather than be concentrated in one. Customers that have banked with both UBS and CS, will now be looking for an alternative and Citi is a flight to quality franchise in Asia that has a very strong brand name as well. The CS saga, including the re-writing of the laws over that fateful weekends, including the wiping out of the AT1 bondholders, clearly did not help to foster trust in the Swiss banking industry either.

UBS management has evidently recognized the problem and risk especially prior to the completion of the CS acquisition. According to a report by Bloomberg, UBS wealth boss Iqbal Khan has traveled to Singapore and Hong Kong trying to reassure bankers and is in the midst of preparing a retention package for top performers. In my view, given the uncertainties noted above, this will probably prove to be too little and too late. CS has over $1 Trillion of clients’ assets and a sizeable proportion of that is or would be lost to competitors (including Citi) by the time UBS completes the acquisition of CS.

Final Thoughts

The recent turmoil in the global banking industry is helping Citi’s competitive position in two key areas. Firstly as I covered in my prior article, the collapse of Silicon Valley Bank (SIVB) is advantageous for its TTS division. Whereas the collapse of CS is turbo-charging its wealth management strategy which is of core importance to its overall strategy. This will certainly move the dial on Citi’s wealth management strategy.

In every banking crisis, there will be losers and winners. Citi is a flight to quality franchise in these uncertain times and is a clear winner in my view.

I remain very bullish.

March 22 (Reuters) – Citigroup Inc (C.N) CEO Jane Fraser on Wednesday expressed confidence in U.S. banks after a series of closures rattled investors and fueled turmoil in global financial markets.

“The banking system is pretty sound,” and large and regional banks are well-capitalized, Fraser told the Economic Club of Washington D.C. on Wednesday.

“This is not a credit crisis. This is a situation where it’s a few banks that have some problems, and it’s better to make sure that we nip that in the bud,” she said.

In the past two weeks, two U.S. banks collapsed, Credit Suisse Group AG (CSGN.S) was taken over by Swiss rival UBS Group AG (UBSG.S) and America’s biggest lenders agreed to deposit $30 billion in beleaguered First Republic Bank (FRC.N). Fraser’s public comments were among the first by a large bank CEO since the tumult began.

Citi, the fourth-largest U.S. lender, was one of 11 major banks that threw a lifeline to First Republic last week in an effort to help it buy time for restructuring.

While Citi is not interested in buying First Republic, Fraser said, it contributed $5 billion to the lender as a mark of confidence – and expects to be paid back.

The move to shore up First Republic was an unprecedented show of unity among banking behemoths that are normally fierce competitors, she said.

“We usually try and kill each other in different deals that we’re trying to do,” Fraser said. “But in this instance, this is one where we’re in a strong position, we want to stop what could have been a problem.”

The rescue efforts failed to stop a 15% plunge in First Republic’s shares on Wednesday.

Elsewhere, the takeover of another ailing lender, Credit Suisse, by rival UBS on Sunday was not surprising, Fraser said.

“I don’t think anyone was falling off their chair that Credit Suisse ultimately ended up where it did, it was really a question of time,” Fraser said. “It’s been a troubled institution for a long time,” she said, citing management instability and various crises.

Scottish-born Fraser also spoke about her life and career in a wide-ranging interview with Carlyle Group Inc (CG.O) Co-Founder David Rubenstein. A travel buff with two college-age children, she is the first woman to lead a major Wall Street bank.

As an only child born to an accountant father, Fraser worked as a golf caddy in her youth before attending Cambridge University and Harvard Business School. Fraser started her career at Goldman Sachs Group Inc, then became a partner at McKinsey & Co and held several executive roles at Citi before taking the helm two years ago.

Fraser praised the quick action taken by U.S. regulators to stop the bank runs that toppled Silicon Valley Bank and Signature Bank earlier this month from spreading more broadly.

The Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation invoked “systemic risk exceptions” that allowed them to guarantee billions of dollars of uninsured customer money.

“It’s very important to protect depositors,” Fraser said. “The banking system everywhere around the world depends on confidence, and that confidence has to be in the safety and security of deposits,” she said.

Our Standards: The Thomson Reuters Trust Principles.

Citigroup (C Quick QuoteC – Free Report) is one of the stocks most watched by Zacks.com visitors lately. So, it might be a good idea to review some of the factors that might affect the near-term performance of the stock.

Over the past month, shares of this U.S. bank have returned -8.2%, compared to the Zacks S&P 500 composite’s -5.1% change. During this period, the Zacks Banks – Major Regional industry, which Citigroup falls in, has lost 15.2%. The key question now is: What could be the stock’s future direction?

Although media reports or rumors about a significant change in a company’s business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.

Revisions to Earnings Estimates

Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company’s earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.

We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors’ interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

Citigroup is expected to post earnings of $1.68 per share for the current quarter, representing a year-over-year change of -16.8%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

The consensus earnings estimate of $5.94 for the current fiscal year indicates a year-over-year change of -16.5%. This estimate has remained unchanged over the last 30 days.

For the next fiscal year, the consensus earnings estimate of $6.71 indicates a change of +12.9% from what Citigroup is expected to report a year ago. Over the past month, the estimate has remained unchanged.

With an impressive externally audited track record, our proprietary stock rating tool — the Zacks Rank — is a more conclusive indicator of a stock’s near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for Citigroup.

The chart below shows the evolution of the company’s forward 12-month consensus EPS estimate:

12 Month EPS

Revenue Growth Forecast

While earnings growth is arguably the most superior indicator of a company’s financial health, nothing happens as such if a business isn’t able to grow its revenues. After all, it’s nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it’s important to know a company’s potential revenue growth.

In the case of Citigroup, the consensus sales estimate of $19.82 billion for the current quarter points to a year-over-year change of +3.3%. The $78.24 billion and $78.04 billion estimates for the current and next fiscal years indicate changes of +3.9% and -0.3%, respectively.

Last Reported Results and Surprise History

Citigroup reported revenues of $18.01 billion in the last reported quarter, representing a year-over-year change of +5.8%. EPS of $1.10 for the same period compares with $1.46 a year ago.

Compared to the Zacks Consensus Estimate of $17.91 billion, the reported revenues represent a surprise of +0.54%. The EPS surprise was -6.78%.

Over the last four quarters, Citigroup surpassed consensus EPS estimates three times. The company topped consensus revenue estimates each time over this period.

Valuation

No investment decision can be efficient without considering a stock’s valuation. Whether a stock’s current price rightly reflects the intrinsic value of the underlying business and the company’s growth prospects is an essential determinant of its future price performance.

Comparing the current value of a company’s valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.

As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.

Citigroup is graded B on this front, indicating that it is trading at a discount to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.

Bottom Line

The facts discussed here and much other information on Zacks.com might help determine whether or not it’s worthwhile paying attention to the market buzz about Citigroup. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.

On the 9th of February, the Federal Reserve Board released the hypothetical scenarios for the 2023 bank stress tests also known as “CCAR”.

The CCAR results should be released by the end of June 2023. This is a key event and a likely catalyst for Citigroup’s (NYSE:C) share price as well as other large U.S. banks such as JPMorgan (JPM). The outcomes from the 2023 CCAR test play an important part in determining the ability of the banks to return capital to shareholders in the form of dividends and share buybacks.

A key reason for the relatively low valuation for Citigroup when measured on a price to tangible book value (~0.6x) or forward P/E ratio (~8x) is the current handicap on returning capital to shareholders. Mr. Market is not valuing banks on their reported profitability, rather the key metric that matters now is how much capital, the banks are allowed to return to shareholders.

I have discussed the various puts and takes for Citigroup in this article. In summary, Citi’s strategy of becoming smaller and safer should (all else being equal) support sustainably lower capital ratios. This is of key importance for the success of Jane Fraser’s strategy. As readers may recall, Citi expects to operate with a target capital ratio (“CET1”) of between 11.5% to 12% in the medium term. Currently, Citi’s target capital ratio is 13% which is materially higher than its medium-term targets.

Now a key milestone along the way for a reduction in the targeted capital ratios is the annual CCAR exercise. The scenarios released last week, as reported by Seeking Alpha, appear to be harsher than prior tests which are obviously not great news for the U.S. banks and Citigroup specifically.

Having said that, it is important to look at the details as every bank has a different business model, and as such, the impact could be vastly different.

In this article, I will endeavor to assess the likely impact on Citigroup and its share price in 2023 and beyond.

Review of the 2022 CCAR results

The 2022 CCAR results were extremely disappointing for Citigroup where its Stress Capital Buffer (“SCB”) has gone up to 4% versus 3% previously (and 2.5% in 2020). This is the key reason why Citi has now paused the share buybacks and is still building capital.

But what caused this adverse movement in the SCB year-on-year?

Below I am comparing the key metrics for the CCAR calculation between the 2021 and 2022 results:

As can be seen above, Citi’s projected loan losses were lower in 2022 compared with 2021 across all categories. But the negative outcome year-on-year was driven primarily by lower projected pre-provision net revenue and higher losses in the “trading and counterparty” category.

It is important to note that the Fed’s CCAR models are somewhat of a “black box” in part to ensure the large banks are not gaming the system. Citi’s own models as disclosed by the firm project pre-provision net revenue of ~$45 billion compared with $28 billion under the Fed’s model – that’s a massive difference of $17 billion and by and large explain the unpleasant surprise Citi experienced in the 2022 CCAR cycle.

The 2023 scenarios compared to 2022

At first glance, the hypothetical scenarios released by the Fed appear to be harsher, but let’s look at the specifics as per the Fed’s guidance:

The current severely adverse scenario features a greater increase in the unemployment rate in the United States as compared to the 2022 severely adverse scenario. This difference reflects the Scenario Design Framework, which calls for a higher increase in the unemployment rate when the starting level of the unemployment rate is lower. The current scenario features a significantly higher starting level of interest rates compared to the previous year’s scenario, which allows interest rates to decline more forcefully in response to the hypothetical drop in economic activity and inflation. The scenario also features a larger and more rapid decline in house prices as compared to their declines in the previous year’s scenario. This larger decline reflects the Scenario Design Framework’s response to the significantly higher housing valuations at the end of 2022. The potential for spillover effects in asset markets and sharp revisions in investor sentiment are captured by a decline in equity prices and an increase in corporate bond spreads, although these changes are somewhat less severe relative to last year’s scenario. These less severe changes reflect the moves in those markets over the course of 2022 and limits procyclicality in the scenario.

The above scenario suggests higher loan losses peak-to-trough especially for unsecured credit as the rise in unemployment is higher from a low starting point of 3.5%. Having said that, Citi’s loan loss provisions as of 31st December 2022 are conservative and already factor in an unemployment rate of 5%+ and include a qualitative management overlay as well. As such, the absolute adverse impact year-on-year on the CCAR results may not be as material as some would expect.

The decline in interest rates has both a negative and positive impact on capital ratios. Lower rates would likely translate into a lower pre-provision net revenue but would also translate to a benefit to capital ratios due to beneficial movement in the AOCI reserves.

On the market shock component, the Fed highlighted the followings:

The 2023 global market shock features fading inflationary pressures, while last year’s component was characterized by worsening supply chain disruptions that put upward pressure on inflation. Accordingly, the current global market shock mainly differs from the 2022 component in the behavior of interest rates, foreign exchange rates, and commodities prices. Treasury rates fall in the current component, with large declines specified for shorter tenors and milder declines specified for longer tenors. In the 2022 component, Treasury rates increased across the term structure, resulting in an upward shift in the yield curve. Similarly, inflation breakeven rates decrease in the current component, while they increased in the 2022 component. The U.S. dollar depreciates against the currencies of advanced countries in the 2023 component, while it mostly appreciated against advanced country currencies in the 2022 component. Nonprecious metals and other commodities, such as oil and natural gas, face large price declines in the current component, while commodity prices increased in the 2022 component due to supply chain disruptions.

Clearly, the impact would depend on Citi’s trading position as well as the Fed’s models. Having said that, Citi in recent quarters has clearly “managed” its trading book conservatively and reduced RWAs. This probably had several desired outcomes including (1) optimizing capital accretion and (2) positioning conservatively the book with an eye to the upcoming CCAR cycle.

Probability distribution of outcomes

My best “guesstimate” for the CCAR outcomes are:

1. Base case (40% probability) SCB reduces to 3.5% from 4%
2. Moderate bear case (30% probability) SCB remains at 4%
3. Bull case (15% probability) SCB reduces to 3%
4. Adverse bear case (15%) SCB increases to 4.5%

The share price reaction is likely to be very positive should (1) or (3) eventuate. A (2) outcome would be largely neutral and the stock will sell off heavily if it results in the outcome (4).

Final thoughts

Citigroup’s share price is highly sensitive to its ability to return capital to shareholders. This is absolutely key for the investment thesis at Citi.

I believe the “new” more stable Citi should outperform in the upcoming CCAR cycle driven by the strong performance in the Services division in 2022 that should mechanically feed into a higher pre-provision net revenue forecast in the Fed’s models.

Given the stock trades at ~0.6x tangible book value, the math for share buybacks is as compelling as ever. With any reduction in the SCB in the upcoming CCAR cycle, I expect the stock to melt up with the expectations of massive buybacks to come.

On the flip side, if it becomes clear that the capital trajectory is materially higher for longer – this will be a significant handicap to the stock performance and investors should reassess the thesis.

At the moment, I am leaning towards a positive outcome in the upcoming CCAR cycle and thus remain very bullish.

In the latest trading session, Citigroup (C Quick QuoteC – Free Report) closed at $71.12, marking a -0.7% move from the previous day. This change was narrower than the S&P 500’s daily loss of 1.08%.

Coming into today, shares of the U.S. bank had gained 8.04% in the past month. In that same time, the Finance sector gained 3.43%, while the S&P 500 gained 2.93%.

C will be looking to display strength as it nears its next earnings release. In that report, analysts expect C to post earnings of $1.78 per share. This would mark year-over-year growth of 27.14%. Our most recent consensus estimate is calling for quarterly revenue of $17.25 billion, down 0.3% from the year-ago period.

C’s full-year Zacks Consensus Estimates are calling for earnings of $9.86 per share and revenue of $71.14 billion. These results would represent year-over-year changes of +102.05% and -4.25%, respectively.

Investors should also note any recent changes to analyst estimates for C. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company’s business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.91% higher within the past month. C currently has a Zacks Rank of #3 (Hold).

Investors should also note C’s current valuation metrics, including its Forward P/E ratio of 7.26. For comparison, its industry has an average Forward P/E of 11.14, which means C is trading at a discount to the group.

Also, we should mention that C has a PEG ratio of 0.91. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock’s expected earnings growth rate. The Banks – Major Regional was holding an average PEG ratio of 1.2 at yesterday’s closing price.

The Banks – Major Regional industry is part of the Finance sector. This group has a Zacks Industry Rank of 125, putting it in the top 50% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

Citigroup Inc. (NYSE: C) shares weakened last week despite the fact that this bank reported better than expected second-quarter earnings.

Fundamental analysis: Citigroup’s outlook remains stable

Citigroup reported its second-quarter results on Wednesday; total revenue has decreased by -11.6% Y/Y to $17.47 billion, while the GAAP EPS was $2.84 (beats by $0.88). Total revenue has decreased below the expectations (beats by $290 million), and the bank’s management expects the accelerating trends in the third quarter.

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Citigroup reported $6.2 billion in net income for the second quarter, and it is important to mention that for the first two quarters of 2021, Citigroup returned close to $7 billion to its shareholders (this was the maximum amount permitted under the Federal Reserve’s rules). CEO Jane Fraser said that the pace of the global recovery is exceeding earlier expectations, and because of this, the outlook for bank returns is significantly more favorable currently than even a few months ago.

CEO Jane Fraser also said that the Investment Banking franchise continues to perform well with good momentum in M&A and a very solid pipeline ahead for the rest of the year. The business of the bank continues to be impacted by lower rates, but the U.S. Federal Reserve is forecasting two interest-rate hikes before the end of 2023.

“We are continuing to see robust client engagement and strong underlying growth in our fee businesses across the franchise, including TTS, Investment Banking, Securities Services, Commercial Banking, and the Private Bank. And excluding the markets-related component, non-interest revenues were up 24% this quarter, and we are confident in our outlook for continued strong fee growth in the back half of the year,” said Mark Mason, CFO of Citigroup.

Citigroup continues to respond to the needs of its clients in the best possible, and it established a “digital assets group” to offer clients access to cryptocurrencies. Citigroup’s outlook remains stable, and with a market capitalization of $138 billion, shares of this bank are reasonably valued.

Citigroup is currently trading at a forward P/E ratio of only 8.38, the book value per share is around $90, and shares of this bank have a low-risk exposure with good upside potential.

Technical analysis: $60 represents a strong support level

Citigroup shares have weakened more than 15% since the beginning of June 2021; still, according to technical analysis, the bulls remain in control of the price action for now. Rising above $75 supports the continuation of the bullish trend, and the next price target could be located around $80.

On the other side, if the price falls below $65, it would be a “sell” signal, and we have the open way to $60.

Summary

Citigroup reported better than expected second-quarter earnings, and CEO Jane Fraser said that the outlook for bank returns is significantly more favorable currently than even a few months ago. Citigroup reported $6.2 billion in net income for the second quarter, even though the bank’s business continues to be impacted by lower rates.

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Citigroup (C Quick QuoteC – Free Report) came out with quarterly earnings of $2.84 per share, beating the Zacks Consensus Estimate of $1.94 per share. This compares to earnings of $0.50 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 46.39%. A quarter ago, it was expected that this U.S. bank would post earnings of $2.56 per share when it actually produced earnings of $3.62, delivering a surprise of 41.41%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

Citigroup, which belongs to the Zacks Banks – Major Regional industry, posted revenues of $17.47 billion for the quarter ended June 2021, surpassing the Zacks Consensus Estimate by 0.62%. This compares to year-ago revenues of $19.77 billion. The company has topped consensus revenue estimates three times over the last four quarters.

The sustainability of the stock’s immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management’s commentary on the earnings call.

Citigroup shares have added about 10.9% since the beginning of the year versus the S&P 500’s gain of 16.3%.

What’s Next for Citigroup?

While Citigroup has underperformed the market so far this year, the question that comes to investors’ minds is: what’s next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company’s earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Citigroup was mixed. While the magnitude and direction of estimate revisions could change following the company’s just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $1.78 on $17.19 billion in revenues for the coming quarter and $9.02 on $70.73 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Banks – Major Regional is currently in the top 48% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

LONDON–(BUSINESS WIRE)–Citi, acting through Citibank N.A., has been appointed by Tremor International Ltd (“Tremor”), a global leader in advertising technologies, to act as depositary bank for its American Depositary Receipt (“ADR”) programme.

Tremor’s American Depositary Shares (“ADSs”) trade on the Nasdaq Global Market under the symbol “[TRMR]”. Each ADS represents two ordinary shares of the company.

Commenting on the appointment, Dirk Jones, Global Head of Issuer Services, at Citi said: “We look forward to supporting Tremor’s ADR programme through the expertise of our Investor Relations Advisory team and the breadth of our global equity distribution network.”

For more information on Citi’s Depositary Receipt Services, please visit www.citi.com/dr

About Tremor International

Tremor International is a global leader in all-screen video and connected TV (CTV) advertising technologies, with a leading-edge end-to-end platform comprised of a DSP (demand-side platform), DMP (data management platform) and SSP (supply-side platform). Tremor’s mission is to provide an automated marketplace for advertisers and publishers that leverages advanced data-driven technology to deliver impactful brand stories for audiences across the globe.

Additional information may be found at: www.tremorinternational.com

About Citi

Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.

Additional information may be found at www.citigroup.com | Twitter: @Citi | YouTube: www.youtube.com/citi | Blog: http://blog.citigroup.com | Facebook: www.facebook.com/citi | LinkedIn: www.linkedin.com/company/citi

Citigroup (C Quick QuoteC – Free Report) closed at $67.61 in the latest trading session, marking a -1.82% move from the prior day. This move lagged the S&P 500’s daily loss of 1.31%.

Coming into today, shares of the U.S. bank had lost 9.63% in the past month. In that same time, the Finance sector lost 0.57%, while the S&P 500 gained 1.56%.

Wall Street will be looking for positivity from C as it approaches its next earnings report date. In that report, analysts expect C to post earnings of $1.94 per share. This would mark year-over-year growth of 288%. Our most recent consensus estimate is calling for quarterly revenue of $17.79 billion, down 9.97% from the year-ago period.

C’s full-year Zacks Consensus Estimates are calling for earnings of $9.16 per share and revenue of $71.44 billion. These results would represent year-over-year changes of +87.7% and -3.85%, respectively.

Investors should also note any recent changes to analyst estimates for C. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company’s business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.65% lower within the past month. C is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note C’s current valuation metrics, including its Forward P/E ratio of 7.52. This represents a discount compared to its industry’s average Forward P/E of 11.61.

We can also see that C currently has a PEG ratio of 0.33. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company’s expected earnings growth rate into account. The Banks – Major Regional industry currently had an average PEG ratio of 1.38 as of yesterday’s close.

The Banks – Major Regional industry is part of the Finance sector. This group has a Zacks Industry Rank of 126, putting it in the top 50% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.