It has been about a month since the last earnings report for Citigroup (C Quick QuoteC - Free Report) . Shares have added about 8.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Citigroup due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Citigroup Q2 Earnings Top Estimates, Revenues Down Y/Y

Citigroup delivered a positive earnings surprise of 46.4% in second-quarter 2021. Income from continuing operations per share of $2.84 handily outpaced the Zacks Consensus Estimate of $1.94. Also, results compared favorably year over year.

Citigroup has recorded equity market revenues jump on strong client volumes, driven by stellar derivatives and prime finance performance. However, fixed-income revenues were down due to an exceptionally good quarter last year.

At the same time, investment banking revenues increased, driven by equity underwriting as well as growth in advisory, partially offset by lower revenues in debt underwriting.

However, normalization in market activity in Fixed Income Markets within the ICG segment, lower average card loans in GCB segment, and lower interest rates marred results.

Net income was $6.19 billion compared with $1.06 billion recorded in the prior-year quarter.

Revenues Decline, Expenses Flare Up

Revenues were down 12% year over year to $17.47 billion in the June-ended quarter. The top line, nonetheless, surpassed the Zacks Consensus Estimate of $17.36 billion. Lower revenues from all three business segments, ICG, GCB and Corporate/Other, resulted in the decline.

In the ICG segment, revenues were $10.39 billion in the April-June quarter, down 14% year over year. Lower treasury & trade solutions along with corporate lending revenues were partly offset by higher investment banking and equity market revenues.

GCB revenues decreased 7% year over year to $6.82 billion. Lower revenues in North America along with declining average card loans and deposit spreads across all three geographic regions resulted in the decline. Notably, both retail banking and card revenues witnessed declines.

Corporate/Other revenues were $267 million, down 8% from $290 million witnessed in the prior-year quarter.

Operating expenses at Citigroup flared 7% year over year to $11.2 billion. Continued investments in the franchise transformation and other strategic investments resulted in the upsurge. These were partly negated by efficiency savings.

Balance Sheet Improves

At the end of the second quarter, Citigroup’s end-of-period assets totaled $2.33 trillion, up 4% sequentially. Deposits were up 6% from the prior year to $1.3 trillion. The company’s loans fell 1%, year over year, to $677 billion.

Credit Quality: A Mixed Bag

Citigroup’s costs of credit for the June-ended quarter were negative $1.1 billion against $8.2 billion recorded in the year-earlier quarter. This reflected the release of allowance for credit loss reserves, backed by higher portfolio quality and an improved macroeconomic outlook.

In the second quarter, the company’s reserve release amounted to $2.4 billion, reflecting a continued improvement in the macro environment and portfolio quality.

Total non-accrual assets decreased 25% year over year to $4.4 billion. The company reported a fall of 1% in consumer non-accrual loans to $1.8 billion. Also, corporate non-accrual loans of $2.6 billion plunged 36%.

Citigroup’s total allowance for loan losses was $19.2 billion at the end of the reported quarter, or 2.88% of total loans compared with $26.3 billion, or 3.87%, recorded in the year-ago period.

Capital Position Solid

At the end of the April-June period, Citigroup’s Common Equity Tier 1 capital ratio was 11.9%, up from the prior-year quarter’s 11.5%. The company’s supplementary leverage ratio in the reported quarter was at 5.9%, down from 6.6%.

As of Jun 30, 2021, book value per share was $90.86, up 9% year over year, and tangible book value per share was $77.87, up 9%.

Capital Deployment

In the reported quarter, Citigroup repurchased 40 million common shares and returned $4.1 billion to shareholders in forms of common stock repurchases and dividends.

2021 Outlook

Management expects 2021 revenues to decline in the mid-single-digit range on a full-year basis. As management accelerates such investments, it expects expenses to increase in the mid-single digits for 2021.

With the strong recovery in consumer spending, the company expects loan growth for its consumer banking segment in the second half of the year.

Management anticipates continued strong fee growth for the second half of the year, driven primarily by ICG. The company expects a quarterly pre-tax loss of $200-$300 million for the remainder of 2021.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

Currently, Citigroup has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. It's no surprise Citigroup has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.