Citigroup Inc. (C) is scheduled to report its financial results on Thursday, October 15. In the last four quarters, the company's actual earnings have been wide-off market's consensus forecast. Particularly in the last quarter, Citigroup surprised investors by reporting an EPS of $0.49 per share, against the market's consensus estimate of $ -0.372.
Analysts estimates for the quarter ending September 2009 (Q3) range from a low of $-0.51 to a high of $-0.07, with a consensus of $-0.229. This means, the group won't break-even in the September 2009 quarter, even though it did make some extra capital by divesting some assets.
The third quarter of 2009 will be devoid of any transaction benefits such as an $11.1 billion benefit from the Smith Barney transaction in the second quarter. Excluding the Smith Barney gain the group would have had a loss of $2.4 billion in the second quarter. So, a loss announcement in the third quarter is not an unexpected event but the markets would be surprised if the loss announcement is wide-off the market's consensus.
In Q3-2009, Citigroup acquired St Regis Monarch Beach Resort (July 21), a minority stake in HBL Power Systems Ltd (Sep 22), and Polski Koncern Miesny Duda SA (Polski). The group divested Colfondos SA Pensiones y Cesantias (Sep 29), Diners Club Card merchant portfolio in Western Europe (Sep 28), a portfolio of personal installment loans from Citifinancial Europe PLC, and the assets of Chengdu Zhongfu Jiaogai Co Ltd (July 23). The group was also rumored to have been in discussions to divest Phibro Inc unit, three credit-card portfolios, the branches of Citicorp Finanziaria SpA (a Milan- based investment company), and the credit cards business (CC) of Citibank Portugal SA (CP).
The sale of Westport, Connecticut-based Phibro would provide Citigroup with a large one-off windfall, but would also deprive it of a profit engine that has contributed about $2 billion to the company's profits in the past five years. In the event a deal fails to materialize, Citigroup is considering selling a majority stake in Phibro, while retaining a minority stake for a few years.
On October 12, 2009, the Financial Industry Regulatory Authority fined Citigroup $600,000, saying it failed to supervise complex trades of foreign equities designed partly to minimize potential tax liabilities.
For the fiscal quarter ending Sep. 2009, the consensus EPS forecast has decreased over the past week from $-0.206 to $-0.229 (-11.17%) and decreased over the past month from $-0.169 to $-0.229 (-35.50%). Of the 17 analysts making quarterly forecasts, none raised and 8 lowered their forecast.
For the fiscal year ending Dec. 2009, the consensus EPS forecast has decreased over the past week from $-0.186 to $-0.218 (-17.20%) and decreased over the past month from $-0.149 to $-0.218 (-46.31%). Of the 17 analysts making yearly forecasts, 1 raised and 7 lowered their forecast.
The group's shares closed Tuesday at $4.83, compared to the 52 week range of $0.97 - $19.25. The stock seems to be trading at appropriate levels.
