Citigroup Inc (NYSE:C) is scheduled to report its third quarter 2010 earnings results on October 18th, 2010, at 8 am EST. Among the major banks, Citi's earnings are the most vulnerable to a weaker US economy given the troubled assets still residing in its run-off portfolios (about $485 billion in Citi Holdings). While the first round of sales did not appear to hurt the stock, the government plans to sell its remaining 5.1 billion C shares (about 17% of total shares outstanding). This new supply, coupled with renewed economic concerns, could result in continued underperformance.
On July 16, 2010, Citigroup reported a second-quarter profit of $0.09 per share, its second straight profitable quarter after a string of quarterly losses dating back to the third quarter of 2007. Citigroup earned $0.14 per share in the previous quarter, but lost $0.56 per share in the year-ago quarter. Citicorp, the ongoing core operations, earned $3.8 billion in 2Q10, down from $5.1 billion in the previous quarter. Revenues of $16.5 billion were down 11%. Total net credit losses of $8.0 billion were down from $8.4 billion in the previous quarter and $11.5 billion in 2Q09. Additionally, nonaccrual assets fell 9% from the previous quarter and were down about 10% sequentially in the previous quarter.
For the third quarter of 2010, the average earnings estimate for Citigroup is 7 cents per share. The high estimate is 11 cents per share and the low estimate is 4 cents per share. For the full year of 2010, the average analyst estimate is 39 cents per share, with a high estimate of 45 cents per share and a low estimate of 32 cents per share. Average revenue estimates for the third quarter of 2010 are 21.38 billion dollars. The high estimate is 23.16 billion dollars and the low estimate is 20.21 billion dollars. Over the past 90 days the earnings estimate for Citigroup have grown by 17 percent from 6 cents per share to 7 cents per share. Growth estimate for Citigroup for the current quarter are 125%, compare to -95% for the sector and 31% for the S&P 500.
Citigroup Inc., is currently trading at $3.91, which is in the middle of the 52 week range of 3.11 – 5.07. Citigroup is trading at a price to earnings multiple of 33, and has debt of 238% of equity. The EPS change from the prior quarter increased 112%. Sales from the prior quarter were down 23% and the 3-year sales growth rate is down 15%. The annual pre-tax margin for Citigroup is-10.2%.
