Citigroup (NYSE:) announced its first-quarter results Monday before the markets opened, and Citigroup stock is down on the news. In spite of an earnings beat, a miss on revenue is causing the drop.
First, before we get into the nuances of the report, let’s have a look at the key numbers.
The Specifics for C Stock
Analysts were expecting in revenue. Citigroup delivered $18.576 billion, $58 million less than analyst expectations and 2% lower than in the same quarter a year earlier.
On the bottom line, analysts were expecting earnings per share of $1.80 according to Refinitiv. The whisper number stood four cents higher at $1.84. Citigroup came in at $1.87 a share, seven cents higher than the consensus and 11% above Q1 2018. Excluding share repurchases, Citigroup’s adjusted net income increased by just 2%.
Breaking it all down, Citigroup’s North American Consumer Banking segment saw revenues increase by year over year due to healthy growth from retail services and branded cards. Its International Consumer Banking saw revenues increase by 3% in the quarter on strong Latin American results.
Citigroup’s Institutional Clients Group’s revenue fell 2% in the quarter to $9.694 billion as a result of weak results from equity markets offset by solid results from investment banking.
Net interest margin, the money it makes on its interest-earning assets, was 2.72%. That’s in line with analyst expectations, 3% ahead of last year and one basis point better than Q4 2018.
Other possible numbers that investors are looking at? Citigroup’s efficiency ratio for the quarter — the amount it is spending other than the interest on debt to generate a profit — was 57%, the 10th straight quarter with an improvement. In the first quarter, its tangible book value per share was $65.55, 7.4% higher than a year earlier and 2.8% higher than in the fourth quarter. Excluding share repurchases, it declined 2.6% year over year and increased 0.33% from Q4 2018.
What Does it All Mean for Citibank Stock?
Citigroup stock is up over 30% (including dividends) year to date. It’s on a big roll, sitting well off its 52-week low of $48.42. I don’t think you can characterize Citigroup’s quarter as particularly strong, but it did increase net earnings by 2% in the quarter despite weak equity markets, which suggests that its core business is still relatively active.
Furthermore, it beat analyst expectations on a per-share basis by 4%. Over the four previous quarters, it beat the estimate by an average of , an indication that the bank is pretty much where analysts expect it to be one quarter into a new fiscal year.
Furthermore, it did generate a return on tangible common equity of 11.9%, barely missing its 2019 target of 12%, a positive if there ever were one.
However, given that it missed on revenues, I don’t see much happening for Citigroup stock in the near term until some catalyst shows up in its business to drive it higher.
If you’re long C stock, there’s nothing in the company’s report to change your mind. If you don’t own Citigroup stock but were thinking of buying, I don’t think there’s much to hang your hat on except that it’s on a bit of a roll. I’d wait for a bit of pullback.
At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.
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