Analyst Note| Eric Compton, CFA |
No-moat rated Citigroup reported its first earnings since its investor day. Earnings per share of $2.02 came in well ahead of the FactSet consensus of $1.43. Top-line revenue came in at $19.3 billion compared to consensus of $18.2 billion, showing a relatively healthy beat all around. Citigroup’s earnings are set to be quite messy for a while given all of the moving parts with different divestitures, so we wouldn’t focus too much on the quarterly numbers compared to consensus. Instead, we’re looking for signs of growth for card balances, signs of other balance sheet growth, signs of fee growth within treasury and trade solutions, or TTS, and personal banking and wealth management, or PBWM, to help offset expected pressure within investment banking and trading, and whether management can meet its expense goals. Based on this quarter’s results, we do not plan to materially alter our current fair value estimate of $78 for the bank, and we view shares as undervalued. It remains a long road ahead for the bank to grind through the many steps of its turnaround, but we thought this quarter was an acceptable start.