Citigroup Stock To Report Mixed Results In Q4?

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Citigroup (NYSE:C) It is scheduled to report its fiscal Q4 2021 results on Friday, January 14, 2022. We expect Citigroup to top consensus estimates for revenue, while earnings are likely to miss the expected figure. Driven by growth in the investment banking and equity trading businesses, the bank posted better-than-expected results last quarter. That said, total revenue was still down slightly from the year-ago period. This was due to a 13% year-on-year decline in the Global Consumer Banking segment, driven by a decline in outstanding loans and lower deposit spread. We expect to see some growth in revenue in the fourth quarter of 2021, with results from investment banking and equity trading, followed by some improvement in the GCB business.

Our forecast shows that Citigroup Valuation $84 per share, which is 28% higher than the current market price of approximately $66. Our interactive dashboard analysis Citigroup earnings preview There is more detail.

(1) Revenue is expected to be slightly ahead of consensus estimates

Citigroup’s Revenue For the full year 2020 were $74.3 billion — at the same level as the 2019 figure, primarily driven by lower GCB revenue, offset by growth in sales and business and investment banking revenue.

  • The company saw a 9% year-on-year decline in the GCB segment in 2020 to nearly $30 billion, driven by interest rate headwinds, a drop in new loan issuance rates and low levels of consumer activity. The unit contributes about 44% of the total revenue, which declined to 40% in 2020. The tough phase continued in the first three quarters of 2021, and cumulative nine-month revenue declined 11%. Notably, the firm has announced that it will exit 13 international consumer banking markets, which are less profitable for the company. That said, we do expect some growth in this segment in the fourth quarter, driven by continued recovery in the economy.
  • The Institutional Client Group segment – which includes sales and trading, investment banking and securities services – grew 12% in 2020. While the investment banking and equity trading businesses saw strong growth in the first three quarters of 2021, FICC (fixed income, currency, and commodity) trading revenues suffered. This resulted in a 5% drop in 2021 cumulative nine-month revenue to $33.4 billion. We expect the same trend to continue in the fourth quarter.
  • Overall, we expect Citigroup revenue to be approximately $71.4 billion for the full year of fiscal 2021.

Trefis estimates Citigroup’s fiscal 2021 fourth quarter revenue to be about $17.41 billion, up 3% from the consensus estimate of $16.85 billion. We expect some improvement in investment banking, equity trading and consumer banking revenues to drive fourth quarter results.

The Fed is expected to raise interest rates in 2022. The move is likely to benefit Citigroup’s net interest income. Besides, investment banking and equity trading businesses are likely to continue their momentum for a few more months. Our Dashboard is on Citigroup’s Revenue Provides more details on the company’s operating segments along with our forecast for the next two years.

2) EPS likely to miss consensus estimates

Citigroup Q4 2021 adjusted earnings per share is expected to be $1.30 per Trefis analysis, which is approximately 7% lower than the consensus estimate of $1.40. While profitability numbers suffered in 2020 due to an increase in credit deficit provisions, they improved significantly in 2021 due to a favorable reduction in provisions. Notably, the bank’s cumulative first nine months EPS increased from $2.82 to $8.70. We expect Q4 EPS to be below the year-ago figure, as the provisions figures are unlikely to see a major dip in Q4. In addition, it halted the share repurchase program in the quarter, which is likely to further reduce shareholder returns. Overall, Citigroup is expected to report adjusted net income of $19.1 billion and annual EPS of $9.98 for the full year 2021.

(3) The stock price is estimated to be 28% higher than the current market price

we get here Citigroup Valuation, using an EPS estimate of approximately $9.98 in fiscal year 2021 and a P/E multiplier of above 8x. This translates to a price of $84, which is 28% higher than the current market price of $66.

Note: P/E multipliers are based on year-end share price and reported (or expected) adjusted earnings for the full year

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