Citigroup Earnings Preview: First Quarter 2009

Citigroup [[C]] is scheduled to report first quarter 2009 results before the market opens on Friday, April 17. Based on our analysis, we at are expecting Citi to report disappointing results that fail to meet Wall Street’s consensus expectations.


Analyst Expectations

We are forecasting revenues of $20.06 billion and EPS of ($.63). This would represent a 52% increase in revenues from last year’s $13.22 billion in the same period. The current analyst consensus calls for revenues of $20.40 billion and ($.36) EPS.


We anticipate loan losses will continue to mount for Citigroup despite the big rally in the stock price after the company announced that they were profitable during January and February. The company has posted five consecutive quarters of multi-billion dollar losses and we would expect that trend to continue. However, now that the financial giant has become a quasi-government entity, it seems unlikely to completely go out of business.


Share Performance

Citigroup’s shares are down 55% since the beginning of the year, but have climbed 198% since closing at an all-time low of $1.02 on March 5, 2009. In 2008, Citi shares plummeted over 77% as the stock badly underperformed the 34% drop in the Dow Jones index.



Shares are now trading at only .8x consensus 2009 revenue estimates. This is a discount to the relative valuations of their peer group. The lack of profitability over the next couple of years should keep investors from buying at this time.


Recommendation: Avoid.


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