Citigroup Earnings Preview: Strong Consumer Banking Showing To Help Citigroup Report Earnings Beat For Full-Year 2019

by Trefis Team
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Citigroup (NYSE: C) is slated to release its Q4 and full-year 2019 results on Tuesday, January 14. Trefis details expectations from the geographically diversified banking giant in an interactive dashboard, parts of which are highlighted below. We believe that Citigroup’s revenues and earnings for FY 2019 will beat consensus – resulting in its stock price rising post earnings release. We expect the bank to report revenues of $73.9 billion (vs. consensus estimate of $73.8 billion) primarily due to strong revenue growth for Global Consumer Banking. Also, earnings are likely to be around $7.74 (vs. consensus estimate of $7.70) due to a combination of higher revenues and slightly lower growth in expenses helping the net income margin figure. Further, we believe that stronger-than-expected revenues and earnings for FY 2019 will very likely result in Citigroup’s stock price increasing once earnings are announced. In fact, our forecast indicates that Citigroup’s valuation is $82 a share, which is roughly 5% above its current price of $79.

(1) Citigroup’s revenues are expected to cross $73.9 billion for FY 2019; slightly above consensus estimates

  • Total revenues have increased at an average annual rate of 2% over the last three years, from $69.9 billion in 2016 to $72.9 billion in 2018.
  • Trefis estimates Citigroup’s 2019 revenues to be $73.9 billion – up 1.5% y-o-y, and slightly above the consensus estimate of $73.8 billion.
  • Citigroup’s Global Consumer Banking division is expected to contribute around 35.3 billion in 2019, roughly 48% of the total revenue figure. Growth in this segment will be primarily driven by an increase in outstanding card and other consumer loans.
  • Although the Institutional Client Group revenues have grown by 9% over the last three years – from $33.9 billion in 2016 to $37 billion in 2018 – we expect it to report a slight drop in 2019 due to negative market conditions and lower consumer activity. We expect segment revenues to be around $36.8 billion in 2019 – roughly 50% of the total revenue figure for the year.
  • Notably, we expect Citigroup’s revenue growth rate to slow down over over subsequent quarters – falling from 2% in 2018 and 1.5% in 2019 to around 1% in 2020.

A separate interactive dashboard for Citigroup details the factors that have driven changes in revenues for Citigroup’s individual revenue streams over recent years along with our forecast for 2019 and 2020.


(2) EPS is expected to increase 16% from $6.68 in 2018 to $7.74 in 2019, narrowly beating consensus estimates

  • Citigroup’s 2019 earnings per share (EPS) is expected to be $7.74 per Trefis analysis, slightly higher than the consensus estimate of $7.70 per share.
  • An increase in Revenues as detailed above coupled with a steady reduction in Shares Outstanding will drive EPS growth despite an expected increase in Total Expenses by 0.6%.
  • We expect Citigroup’s Revenues to grow at a faster rate than Expenses in 2019 (1.5% vs. 0.6%), which will result in a slight increase in Citigroup’s Net Income Margin figure from 22.9% in 2018 to 23.6% in 2019.
  • For 2020, we believe that slight growth in revenues and expenses will result in the adjusted net income margin figure shrinking marginally to 23.5%

Our interactive dashboard analysis, How Does Citigroup Spend Its Money, provides an in depth view of the company’s expenses.


(3) Stock price estimate ~5% higher than market price

  • A trailing P/E multiple of 10.6x looks appropriate for Citigroup’s stock, as opposed to the current implied P/E multiple of 10.3x.
  • Trefis’ forecast for Citigroup’s 2019 earnings as well as P/E multiple are slightly higher than market expectations, working out to a fair value of $82 for Citigroup’s stock as opposed to the current market price around $79.

Additionally, you can input your estimates for Citigroup’s key metrics in our interactive dash board for Citigroup’s pre-earnings, and see how that will affect the company’s stock price.


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