Filed Under: ,
Tickers in this Article: C
Citigroup (NYSE:C) announced its results for the second quarter on October 15, 2012. Citigroup is a financial services holding company that provides corporations, governments, and consumers with a broad range of financial products and services.

Earnings play an important role in measuring the appropriate valuation for a stock. Investors should be cautious if the company's stock price is high but it consistently has low earnings. SEE: 5 Tricks Companies Use During Earnings Season

The Numbers: Citigroup managed to exceed estimates with stronger-than-expected EPS and revenues. The company reported adjusted net income of $1.06 per share versus the 97 cents per share estimate and revenues of $19.41 billion versus the $18.76 billion estimate. Revenue fell 6.8% from the same period last year. Citigroup's net income for the second quarter fell 86% from last year's figures to $468 million. Last quarter marks the third in a row in which the company's net income has fallen. Profits declined 2.3% in the first quarter and 27% in the fourth quarter of the last fiscal year.

Management Quote: Vikram Pandit, Citi's Chief Executive Officer, said, "Our core businesses showed momentum during the quarter as we increased lending and generated higher operating revenues. These earnings highlight the strength of Citicorp and its diversification by product and region. For the third straight quarter, we had positive operating leverage in each of our three core businesses. Citigroup in total also had positive operating leverage as Citi Holdings had a smaller impact on our overall results.

A Look Back: Net income has dropped 3.5% year-over-year on average across the last five quarters. Performance was hurt by an 86% decline in the most recent quarter from the year-earlier quarter.

Looking Ahead: The outlook for the company's results in the upcoming quarter is unfavorable. The average estimate for the third quarter is 99 cents per share, down from $1.04 90 days ago. Decreasing earnings estimates is generally a negative sign as it suggests analyst believe future earnings to be weaker than previously anticipated. For the fiscal year, the average estimate has moved down from $4.07 a share to $3.89 over the last 90 days.

comments powered by Disqus

Trading Center