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Solid Trading Performance to Aid Citigroup (C) Q1 Earnings
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Increase in client activities and rise in market volatility are likely to have aided Citigroup’s (C - Free Report) trading revenues (both equity and fixed-income), driving first-quarter 2021 earnings, slated to be released on Apr 15.
This year began on a positive note with vaccine breakthroughs, expectations of economic rebound and stimulus packages, which resulted in all the major indexes — the S&P 500, Dow Jones and Nasdaq — swinging to new highs. Along with impressive equity markets performance, fixed income trading remained strong, driven by the Federal Reserve’s bond-buying program. Hence, Citigroup’s equity and fixed income markets revenues are expected to have improved in the to-be-reported quarter.
Other Factors at Play
Low Consumer Banking Revenues: Citigroup might have witnessed decent consumer banking revenues, mainly due to a surge in consumer activity on a relaxed lockdown measures and resumption of business activities during the first quarter. Also, the $1.9-trillion stimulus package is likely to have provided support. However, global card fees might have been hurt to an extent on rise in consumer spending.
Decent Investment Banking (IB) Fees: Global M&A activity continued to impress during the January-March quarter as dealmakers across the globe were active during this period with rise in M&A deal numbers. Therefore, this might have had a positive impact on Citigroup’s advisory fees.
Moreover, IPO activities were strong, and as companies tried to build liquidity to tide over the pandemic-induced crisis, there was a substantial rise in follow-up equity issuances.
Also, equity market performance was impressive and overall debt issuances were on an upswing given the lower interest rates. Thus, equity underwriting and debt origination fees are anticipated to have gone up in the quarter under consideration.
Overall, the consensus estimate for corporate and IB fees of $1.5 billion indicates 11% growth from the prior-year quarter’s reported number.
Muted Net Interest Income (NII) Growth: Near-zero level interest rates might have continued to dampen the bank’s net interest margin during the quarter to be reported. Also, per the Fed’s latest data, rise in loans might have been low during the quarter, particularly due to weakness in revolving home equity and commercial and industrial loans.
Though steepening of the yield curve might have offered some respite to net interest margin, a soft lending scenario is likely to have curtailed growth in Citigroup’s NII to some extent.
The Zacks Consensus Estimate for NII of $10.4 billion suggests a 9.5% decline from the prior-year quarter.
Rise in Expenses: Management is focused on protecting employees and supporting customers. Targeted investments in the franchise are being made where the best opportunities for the future are foreseen, and accelerated investments done to achieve excellence in the risk and control environment and enhance operations for a fully digital world.
At a conference held in February-end, Citigroup informed investors regarding its expectations of mid-single-digit growth in expenses in the first quarter.
Reserve Build: Significant reserves that were built in 2020 owing to deterioration in the macroeconomic backdrop are likely to have been released in the first quarter, with support from stimulus packages and improvement in economic conditions.
Here is what our quantitative model predicts:
Citigroup has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Citigroup is +3.14%.
Zacks Rank: Citigroup currently carries a Zacks Rank of 3.
Over the last seven days, the Zacks Consensus Estimate for earnings has recorded upward revision on analysts’ optimism. Also, the consensus mark suggests a significant surge from the year-ago reported number.
However, the Zacks Consensus Estimate for sales of $18.7 billion indicates a 9.8% decline from the prior-year quarter.
Here are some other stocks you may want to consider, as according to our model these have the right combination of elements to post an earnings beat this quarter.
The Earnings ESP for Huntington Bancshares Incorporated (HBAN - Free Report) is +1.73% and it carries a Zacks Rank of 3, at present. The company is scheduled to report quarterly numbers on Apr 22.
New York Community Bancorp, Inc. (NYCB - Free Report) is slated to report quarterly earnings on Apr 28. The company, which carries a Zacks Rank of 2 (Buy) at present, has an Earnings ESP of +2.02%.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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Solid Trading Performance to Aid Citigroup (C) Q1 Earnings
Increase in client activities and rise in market volatility are likely to have aided Citigroup’s (C - Free Report) trading revenues (both equity and fixed-income), driving first-quarter 2021 earnings, slated to be released on Apr 15.
This year began on a positive note with vaccine breakthroughs, expectations of economic rebound and stimulus packages, which resulted in all the major indexes — the S&P 500, Dow Jones and Nasdaq — swinging to new highs. Along with impressive equity markets performance, fixed income trading remained strong, driven by the Federal Reserve’s bond-buying program. Hence, Citigroup’s equity and fixed income markets revenues are expected to have improved in the to-be-reported quarter.
Other Factors at Play
Low Consumer Banking Revenues: Citigroup might have witnessed decent consumer banking revenues, mainly due to a surge in consumer activity on a relaxed lockdown measures and resumption of business activities during the first quarter. Also, the $1.9-trillion stimulus package is likely to have provided support. However, global card fees might have been hurt to an extent on rise in consumer spending.
Decent Investment Banking (IB) Fees: Global M&A activity continued to impress during the January-March quarter as dealmakers across the globe were active during this period with rise in M&A deal numbers. Therefore, this might have had a positive impact on Citigroup’s advisory fees.
Moreover, IPO activities were strong, and as companies tried to build liquidity to tide over the pandemic-induced crisis, there was a substantial rise in follow-up equity issuances.
Also, equity market performance was impressive and overall debt issuances were on an upswing given the lower interest rates. Thus, equity underwriting and debt origination fees are anticipated to have gone up in the quarter under consideration.
Overall, the consensus estimate for corporate and IB fees of $1.5 billion indicates 11% growth from the prior-year quarter’s reported number.
Muted Net Interest Income (NII) Growth: Near-zero level interest rates might have continued to dampen the bank’s net interest margin during the quarter to be reported. Also, per the Fed’s latest data, rise in loans might have been low during the quarter, particularly due to weakness in revolving home equity and commercial and industrial loans.
Though steepening of the yield curve might have offered some respite to net interest margin, a soft lending scenario is likely to have curtailed growth in Citigroup’s NII to some extent.
The Zacks Consensus Estimate for NII of $10.4 billion suggests a 9.5% decline from the prior-year quarter.
Rise in Expenses: Management is focused on protecting employees and supporting customers. Targeted investments in the franchise are being made where the best opportunities for the future are foreseen, and accelerated investments done to achieve excellence in the risk and control environment and enhance operations for a fully digital world.
At a conference held in February-end, Citigroup informed investors regarding its expectations of mid-single-digit growth in expenses in the first quarter.
Reserve Build: Significant reserves that were built in 2020 owing to deterioration in the macroeconomic backdrop are likely to have been released in the first quarter, with support from stimulus packages and improvement in economic conditions.
Here is what our quantitative model predicts:
Citigroup has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Citigroup is +3.14%.
Zacks Rank: Citigroup currently carries a Zacks Rank of 3.
Over the last seven days, the Zacks Consensus Estimate for earnings has recorded upward revision on analysts’ optimism. Also, the consensus mark suggests a significant surge from the year-ago reported number.
However, the Zacks Consensus Estimate for sales of $18.7 billion indicates a 9.8% decline from the prior-year quarter.
Citigroup Inc. Price and EPS Surprise
Citigroup Inc. price-eps-surprise | Citigroup Inc. Quote
Other Banks Worth a Look
Here are some other stocks you may want to consider, as according to our model these have the right combination of elements to post an earnings beat this quarter.
The PNC Financial Services Group, Inc (PNC - Free Report) is slated to report quarterly results on Apr 16. The company has an Earnings ESP of +0.64% and currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Earnings ESP for Huntington Bancshares Incorporated (HBAN - Free Report) is +1.73% and it carries a Zacks Rank of 3, at present. The company is scheduled to report quarterly numbers on Apr 22.
New York Community Bancorp, Inc. (NYCB - Free Report) is slated to report quarterly earnings on Apr 28. The company, which carries a Zacks Rank of 2 (Buy) at present, has an Earnings ESP of +2.02%.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>