Shares of Citigroup (C - Free Report) surged as much as 2% in early morning trading Thursday, just one day ahead of the highly-anticipated release of the company’s latest quarterly earnings report.
With interest rate uncertainty looming above the entire finance sector, investors will want to pay close attention to the latest results from a banking titan like Citigroup. Here’s what to expect from the firm’s first quarter 2018 report tomorrow.
Industry Trends
The Zacks-defined “Banks – Major Regional” industry has returned nearly 19% over the past year, outpacing the S&P 500’s 14.3% gain. However, the group has slumped about 8.3% over the past month as new headwinds challenge its strong run.
Specifically, yields on the benchmark 10-year Treasury bond have moved sideways recently, marking a change to the uptrend in treasury yields that had been in place since September. The Fed is still poised to tighten its monetary policy, but there is now a question about whether the central bank will announce four rate hikes, or more, this year.
Investors in this space should continue to monitor this interest rate uncertainty as they clamor for the earnings growth catalyst that is a higher interest rate.
Latest Outlook and Valuation
Based on our latest Zacks Consensus Estimates, we expect Citigroup to report earnings of $1.61 per share and total revenue of $18.90 billion. These results would represent year-over-year growth rates of 18.4% and 4.3%, respectively.
Heading into its report date, Citigroup is trading with a Forward P/E of 10.5, which represents a discount to its industry’s average of 11.8. Within the past year, the stock has traded as high as 14.3x forward 12-month earnings and as low as 10.2x. Its median earnings multiple over that time is 11.9x. Investors might conclude that Citigroup shares are slightly undervalued right now.
Earnings ESP Whispers
Investors will also want to anticipate the likelihood that Citigroup surprises investors with better-than-anticipated earnings results. For this, we turn to our Earnings ESP figure.
Zacks Earnings ESP (Expected Surprise Prediction) looks to find earnings surprises by focusing on the most recent analyst estimates. This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.
A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.
Citigroup is currently holding a Zacks Rank #3 (Hold) and an Earnings ESP of +0.5%. This is because the company’s Most Accurate Estimate for earnings sits at $1.62 per share, meaning that the most recent analyst estimates have been higher than the consensus. Based on this, we can conclude that our model is suggesting a beat is likely.
Surprise History
Investors also want to consider Citigroup’s history of earnings surprises and the effect that these beats have had on share prices. The company has met or surpassed earnings estimates in each of the trailing 12 quarters, but a positive bottom-live surprise has not always translated into upward momentum for its stock.
We judge the price effect of these earnings beats by comparing the closing price of the stock two days before the report and two days after the report. Over the span of Citigroup’s recent streak, the stock has moved higher in just six quarters during these periods.
Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
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Shares of Citigroup (C - Free Report) surged as much as 2% in early morning trading Thursday, just one day ahead of the highly-anticipated release of the company’s latest quarterly earnings report.
With interest rate uncertainty looming above the entire finance sector, investors will want to pay close attention to the latest results from a banking titan like Citigroup. Here’s what to expect from the firm’s first quarter 2018 report tomorrow.
Industry Trends
The Zacks-defined “Banks – Major Regional” industry has returned nearly 19% over the past year, outpacing the S&P 500’s 14.3% gain. However, the group has slumped about 8.3% over the past month as new headwinds challenge its strong run.
Specifically, yields on the benchmark 10-year Treasury bond have moved sideways recently, marking a change to the uptrend in treasury yields that had been in place since September. The Fed is still poised to tighten its monetary policy, but there is now a question about whether the central bank will announce four rate hikes, or more, this year.
Investors in this space should continue to monitor this interest rate uncertainty as they clamor for the earnings growth catalyst that is a higher interest rate.
Latest Outlook and Valuation
Based on our latest Zacks Consensus Estimates, we expect Citigroup to report earnings of $1.61 per share and total revenue of $18.90 billion. These results would represent year-over-year growth rates of 18.4% and 4.3%, respectively.
Heading into its report date, Citigroup is trading with a Forward P/E of 10.5, which represents a discount to its industry’s average of 11.8. Within the past year, the stock has traded as high as 14.3x forward 12-month earnings and as low as 10.2x. Its median earnings multiple over that time is 11.9x. Investors might conclude that Citigroup shares are slightly undervalued right now.
Earnings ESP Whispers
Investors will also want to anticipate the likelihood that Citigroup surprises investors with better-than-anticipated earnings results. For this, we turn to our Earnings ESP figure.
Zacks Earnings ESP (Expected Surprise Prediction) looks to find earnings surprises by focusing on the most recent analyst estimates. This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.
A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.
Citigroup is currently holding a Zacks Rank #3 (Hold) and an Earnings ESP of +0.5%. This is because the company’s Most Accurate Estimate for earnings sits at $1.62 per share, meaning that the most recent analyst estimates have been higher than the consensus. Based on this, we can conclude that our model is suggesting a beat is likely.
Surprise History
Investors also want to consider Citigroup’s history of earnings surprises and the effect that these beats have had on share prices. The company has met or surpassed earnings estimates in each of the trailing 12 quarters, but a positive bottom-live surprise has not always translated into upward momentum for its stock.
We judge the price effect of these earnings beats by comparing the closing price of the stock two days before the report and two days after the report. Over the span of Citigroup’s recent streak, the stock has moved higher in just six quarters during these periods.
Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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