) is scheduled to report its first-quarter 2014 results on
Monday, Apr 14, before the opening bell.
Though Citigroup delivered positive earnings surprises in the
first two quarters of 2013, it missed in the remaining quarters.
The company's fourth-quarter earnings per share lagged the Zacks
Consensus Estimate by 19.2%. Results were adversely affected by
declining fixed income revenues and the impact of credit
valuation adjustment (CVA) and debt valuation adjustment (DVA).
Will Citigroup disappoint again in the upcoming release? Let's
see how things have shaped up for this announcement.
Factors to Influence First-Quarter Results
The unfavorable macro scenario along with several of the
company's internal issues may weigh on Citigroup's top line in
The company is combating troubled times owing to the detection of
fraud in its Mexico-based subsidiary that resulted in the
reinstatement of fourth-quarter and 2013 results and triggered
the Fed probe.
Further, the rejection of Citigroup's capital plan under the
Dodd-Frank Act supervisory stress test 2014 (DFAST 2014) by the
Federal Reserve has brewed trouble.
We apprehend higher litigation costs in the quarter due to
several other ongoing lawsuits. Alongside, owing to a volatile
foreign exchange market, Citigroup may continue to report
declining fixed income trading revenues.
Among others factors, weak loan growth and stringent regulatory
norms in a persistently low interest rate environment could act
as dampeners to the company's financials.
However, Citigroup has some encouraging traits that may favorably
support its results. These include its efforts to improve asset
quality, expense management and its focus on shedding non-core
assets. Moreover, the deposit portfolio has shown a decent
improvement in all quarters of 2013.
Further, we believe Citigroup is poised to report strong capital
ratios, as it exhibited healthy capital levels in the DFAST 2014.
It should be noted that the rejection of the 2014 capital plan by
the Fed was primarily based on qualitative factors.
Activities of Citigroup during the first quarter of the year were
not enough to encourage analysts' confidence. As a result, the
Zacks Consensus Estimate for the quarter declined 1.7% to $1.18
per share over the last 7 days.
Our proven model does not conclusively show that Citigroup is
likely to beat the Zacks Consensus Estimate in the first quarter.
That is because a stock needs to have both a positive
and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this
to happen. Unfortunately, this is not the case here as elaborated
Citigroup's ESP is -3.39%. This is because the Most
Accurate estimate of $1.14 is below the Zacks Consensus Estimate
Though Citigroup's Zacks Rank #3 increases the predictive power
of ESP, we also need to have a positive ESP to be confident about
an earnings beat.
Other Stocks to Consider
Here are a few stocks that you may want to consider, as our model
shows that these have the right combination of elements to post
an earnings beat this quarter:
The earnings ESP for
The PNC Financial Services Group, Inc.
) is +2.41% and it carries a Zacks Rank #3 (Hold). The company is
scheduled to release its first-quarter results on Apr 16.
) has an earnings ESP of +6.82% and carries a Zacks Rank #2
(Buy). It is expected to report its first-quarter results on Apr
First Horizon National Corp.
) has an earnings ESP of +6.67% and carries a Zacks Rank #3
(Hold). It is expected to report its first-quarter results on Apr
BANKUNITED INC (BKU): Free Stock Analysis
CITIGROUP INC (C): Free Stock Analysis Report
FIRST HRZN NATL (FHN): Free Stock Analysis
PNC FINL SVC CP (PNC): Free Stock Analysis
To read this article on Zacks.com click here.