On May 30, 2014, we issued an updated research report on
). The company exhibits decent fundamentals amid several ongoing
We remain optimistic owing to Citigroup's efforts to contain costs
and drive operational efficiency. Notably, Citigroup expects to
achieve around $2.2 billion of annual savings from the initiatives
it has in place.
Further, the company is continuing to offload distressed assets
from its Citi Holdings unit to boost earnings and focus more on
core operations. Notably, Citi Holdings' assets declined 23% from
the prior-year quarter to $114 billion and comprised only 6% of the
company's total assets at the end of first-quarter 2014.
Citigroup exhibited a strong capital position in the 2014 stress
test. Though the 2014 capital plan rejection by the Federal Reserve
raised concerns, it should be noted that the rejection was based on
certain "qualitative reasons". As the company is working on the
glitches, we believe it has enough potential to get the Fed's nod
on its 2015 capital plan.
Citigroup's first-quarter 2014 earnings per share of $1.30 outpaced
the Zacks Consensus Estimate by 10.2%. Also it came a penny above
the prior-year earnings. Results were aided by lower expenses,
partially offset by a decline in revenues. Improved credit quality
was another positive.
Despite the company's strengths, we remain cautious owing to
several issues faced by Citigroup. These include absence of steady
growth in revenues, escalating litigation issues and the prevailing
stringent regulatory landscape.
Analysts' bearish stance on the stock was reflected in the movement
of the Zacks Consensus Estimate over the past 60 days. For 2014,
the Zacks Consensus Estimate declined 1.7% to $4.74 per share while
for 2015 it fell 2.1% to $5.47 per share.
Citigroup currently carries a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
KCG Holdings, Inc.
Woori Finance Holdings Co., Ltd.
Central Pacific Financial Corp.
) are among the better-ranked stocks in the finance sector. All
these stocks hold a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
CITIGROUP INC (C): Free Stock Analysis Report
KCG HOLDINGS (KCG): Free Stock Analysis Report
CENTRAL PAC FIN (CPF): Free Stock Analysis
WOORI FIN-ADR (WF): Get Free Report
To read this article on Zacks.com click here.