• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / Stocks

Citigroup's Mixed Results Prompt Muddled Reaction in Its Shares

Citigroup investors may need more information before calling the earnings beat a buying opportunity.
By KEVIN CURRAN Apr 15, 2019 | 09:31 AM EDT
Stocks quotes in this article: C, JPM, WFC, BAC, GS

Citigroup Inc.'s (C) first-quarter earnings are drawing a mixed reaction from the market on Monday morning.

The banking giant reported earnings per share of $1.87, besting estimates set at $1.80 per share, and posted revenue that came nearly in line with the FactSet consensus.

Despite the largely positive headline results, the stock slid on the initial release before building back up to a flat open on Monday.

The volatile move comes after the JPMorgan Chase & Co.  (JPM) results set a high standard for banking stocks, especially for Citigroup, which has registered a nearly 30% gain year to date and ran strongly on Friday following the JPM report.

"We cautioned club members during our Friday conference call that Citigroup is not as good as JPM, and we have considered downgrading our rating," the Action Alerts PLUS team said on Friday, anticipating more tepid results from JPM's peer. (Citigroup and JPMorgan Chase are holdings of Jim Cramer's Action Alerts PLUS charitable trust.)

Parsing the results, there are some red flags as well.

Citigroup's net in the first quarter increased about 2%, but that largely was driven by a lower effective tax rate, which was reported at 21% in the current quarter compared to 24% in the first quarter of 2018. In addition, revenues decreased 2% year over year; the decline was blamed on lower revenues in equity markets, losses in the institutional clients group and the wind-down of legacy assets.

Equity-trading revenue was a notable sore spot, marking a 24% decline in the first quarter due to lower market volumes and client financing balances.

Still, the mixed results also have a good degree of encouraging figures, including an improved efficiency ratio, better expense control, higher-than-expected fixed-income revenue and strong results from the Mexico and Latin America business.

"Our earnings reflect the progress we are making to improve our return on and return of capital. Both our consumer and institutional businesses performed well and we saw good momentum in those areas where we have been investing, such as U.S. Branded Cards, Treasury and Trade Solutions, and Investment Banking," CEO Michael Corbat said. "Importantly, our strategy in North America consumer banking is showing good early results as we introduce new products and engage with a broader range of customers, through digital channels."

Corbat noted that the company also has been focused on returning capital to shareholders so far in 2019.

"We returned over $5 billion to our shareholders during the quarter, contributing to the 11% increase in our earnings per share from a year ago," Corbat said. "We further reduced our common shares outstanding, down 9% from a year ago, while maintaining our Common Equity Tier 1 Capital Ratio at 11.9%."

The bank repurchased 66 million shares totaling about $4.06 billion in the first quarter and returned $1.08 billion to shareholders through dividends.

Among the big banks that have reported thus far only Wells Fargo & Co.  (WFC) , a bank dealing with a myriad of its own issues, has fallen on its earnings release. Wells Fargo stock is actually in negative territory year to date, which contrasts its situation starkly not only with Citi but with the 12% year-to-date gain for JPMorgan, a more than 20% gain for Bank of America Corp.  (BAC) , a more than 15% gain for Morgan Stanley MS, and a more than 20% gain for Goldman Sachs Group Inc.  (GS) as of Friday's close. (Goldman Sachs also is a holding of the Action Alerts PLUS charitable trust.)

The mixed results from both Citigroup and Goldman Sachs set somewhat uncertain footing for the Bank of America and Morgan Stanley results still to come this week, especially as JPMorgan's blockbuster earnings seem to be setting the expectations.

An earnings call for Citi is scheduled for 10 a.m. ET and will likely give some clarity on the stock's trajectory for the full day's trading.

"No specific guidance in the slide deck," Credit Suisse analyst Susan Katzke noted. "We would expect management to leave full-year targets unchanged at present."

The conference call webcast will be available here.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are restricted from trading individual securities.

TAGS: Bonds | Commodities | Earnings | Interest Rates | Investing | Stocks | Banking | Financial Services | Fintech | Stock of the Day

More from Stocks

Market Holds Its Own Amid the Chaos

James "Rev Shark" DePorre
Mar 20, 2023 4:53 PM EDT

Let's check the rotation turning under the surface, the likelihood of rate hikes and why investors are scratching their heads over this action.

Market's Giving Us a Gut-Check, but Not Necessarily a 2000, 2008 Replay

Brad Ginesin
Mar 20, 2023 2:26 PM EDT

Here's why, despite the unravelling of several major banks, Apple can still be owned and AI is still worth investing in.

Trading Foot Locker Now Comes With a Risk

Bruce Kamich
Mar 20, 2023 2:08 PM EDT

Let's see what the outlook looks like after earnings.

How to Trade China's E-commerce PDD Holdings Now

Bruce Kamich
Mar 20, 2023 1:17 PM EDT

Previously know as Pinduoduo, weak consumer spending has plagued the stock.

Market Rotation Hits Reverse

James "Rev Shark" DePorre
Mar 20, 2023 11:51 AM EDT

The Dow and the small caps turned up on Monday, but many charts that I'm looking at are still a mess, and I don't see any reason to put cash to work.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 10:28 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    There are exceptions to conventional trading wisdo...
  • 05:43 PM EDT CHRIS VERSACE

    Latest AAP Podcast

    I'm joined by Real Money contributor Peter Tchir a...
  • 08:20 AM EDT PETER TCHIR

    Pre-CPI Thoughts

    I believe the risk to CPI is "asymmetric." It ...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2023 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login