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Will Citigroup (C) Disappoint This Earnings Season?

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Citigroup, Inc. (C - Free Report) is scheduled to report its fourth-quarter and full-year 2013 results on Thursday, Jan 16, before the opening bell.

Though Citigroup delivered positive earnings surprises in the first two quarters of 2013, it failed to do so in the last quarter. The company’s third-quarter earnings per share of $1.02 lagged the Zacks Consensus Estimate by 4 cents. Results were adversely affected by credit valuation adjustment (CVA) and debt valuation adjustment (DVA).

Will Citigroup disappoint this earnings season as well? Let’s see how things have shaped up for this announcement.   

Factors to Influence Q4 Results

The unfavorable macro issues may weigh on Citigroup’s top line and balance sheet in the quarter. Among others, a dismal mortgage market, weak loan growth and stringent regulatory norms in a persistently low interest rate environment are the primary dampeners.

However, Citigroup has some encouraging traits that may support its results. These include its efforts to maintain a better asset quality, expense management and its focus on shedding non-core assets. Moreover, the deposit portfolio has shown a decent improvement in the last three consecutive quarters. If the company can sustain this trend, it is going to be another positive for the company.
Activities of Citigroup during the fourth quarter of the year were not enough to encourage analysts’ confidence. As a result, the Zacks Consensus Estimate for the quarter declined 6.8% to 96 cents per share over the last 7 days.

Earnings Whispers

Our proven model does not conclusively show that Citigroup is likely to beat the Zacks Consensus Estimate in the fourth quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least #2 (Buy) or #3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP:  The Earnings ESP for Citigroup is -1.04%.  This is because the Most Accurate Estimate of 95 cents is below the Zacks Consensus Estimate of 96 cents.

Zacks Rank: Citigroup’s Zacks Rank #4 (Sell) further lowers the predictive power of ESP.

Other Stocks to Consider

Here are a few stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

The earnings ESP for SunTrust Banks, Inc. (STI - Free Report) is +1.43% and it carries a Zacks Rank #3 (Hold). The company is scheduled to release its fourth-quarter results on Jan 17.

Northern Trust Corporation (NTRS - Free Report) has a positive earnings ESP of +1.32% and carries a Zacks Rank #3 (Hold). The company is scheduled to release its fourth-quarter results on Jan 14.

State Street Corporation (STT - Free Report) , carrying a Zacks Rank #3 (Hold) along with a positive earnings surprise of +3.36%, is scheduled to release its fourth-quarter results on Jan 24.

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