Citigroup Inc. (C, Financial) will release its financial figures for the fourth quarter of fiscal 2017 before the market opens on Jan. 16.
Consensus is for an average earning per share of $1.22. This is a mean of 20 estimates. These estimates range between a low of $1.15 and a high of $1.36. As portrayed in the chart below, earnings per share are expected to increase by 7% compared to the same quarter of fiscal 2016.
Source: Yahoo Finance
The average revenue estimate for the quarter is $17.34 billion. This a nearly 2% upside from the prior-year quarter. Nineteen analysts were surveyed and their estimates range between $16.95 billion and $18.19 billion.
Source: Yahoo Finance
If Citigroup will not appropriately exceed the consensus on net earnings and revenues, this will likely mark a worsening in the trailing 12-months net profit margin of the bank (calculated as net income divided by Citi’s revenue) that as of the third quarter of 2017 is 22%. This is nearly 1 percentage point lower than the industry median of 22.99%.
The chart below shows Citi group’s annual net margins over the last five fiscal years as well as the U.S. giant bank’s interest revenues and net earnings:
Besides the net margin, which measures how profitable Citigroup’s business was over a certain period, I like to see how much of this profit came from borrowing rather than asset management and trading activities. The chart below compares Citigroup to its most direct peers according to the loan-to-assets ratio:
| Item (in billions of USD), as of Q3 FY 2017 | Wells Fargo & Co. | JP Morgan Chase | Citigroup | Bank of America |
| Loans | 951.873 | 913.761 | 653.183 | 927.117 |
| Total assets | 1,934.939 | 2,563.074 | 1,889.133 | 2,283.896 |
| Loan-to-assets ratio | 49.2% | 35.65% | 34.58% | 40.60% |
With a loan-to-assets ratio of 34.6%, the chart also tells that Citigroup’s net profit is more reliant on asset management and trading activities than Wells Fargo and Bank of America are.
In addition, for the quarter that ended in September, Citigroup’s total assets returned an annualized 0.88% to shareholders in terms of net profit while the industry median was 0.9%.
With its quarterly and full fiscal 2017 report, Citigroup will also provide shareholders with an update of the balance sheet that as of the most recent quarter is characterized by the following:
An amount of $438.717 billion in cash on hand and securities, $1.254 trillion in long-term investments and $1.66 trillion in total liabilities.
Citigroup is trading around $75.41 per share and the market capitalization is $199.38 billion. The stock has a price-book ratio of 0.96 versus an industry median of 1.22, a price-sales ratio of 2.91 versus an industry median of 3.44 and a price-earnings ratio is 14.53 versus an industry median of 14.62.
Citigroup is currently below the Peter Lynch earnings line without NRI:
The forward price-earnings ratio is 12.89 versus an industry median of 14.77. When this ratio is multiplied by $6.09, which is the EPS forecasted by analysts for full fiscal year 2018, it yields a value of $78.5.
The average target price is $80.77 per share, which is 7% higher than the current market value per share.
Citigroup is currently reporting 2.64 billion shares outstanding, of which a percentage of 82.24% is held by institutions. Insiders hold 0.12% of its stock.
As of Sept. 29, the bank's top shareholders include Blackrock Inc. with 7.13% outstanding shares, the Vanguard Group Inc. with 6.97%, State Street Corp. with 4.60% and FMR LLC with 4.10%.
Among the top institutional holders of Citigroup there are also JPMorgan Chase & Company with a 1.86% stake and Bank Of New York Mellon Corporation with 1.74%.
Disclosure: I have no positions in any stock mentioned in this article.
