TECH - Citigroup JPMorgan and Wells Fargo Are Part of Zacks Earnings Preview | Benzinga
Making the Case for Bank Stocks
Citigroup (NYSE: C) shares have been star performers lately, with the stock not only handily outperforming the S&P 500 index this year (+19.8% vs. +6.3%) but also leading JPMorgan (NYSE: JPM) (up +16.1%) and Wells Fargo (NYSE: WFC) (up +16.7%).
Citigroup's performance lead over its peers extends further if we go back a few months, say to the preceding 6-month period.
Seeing a perennial laggard like Citigroup show this type of energy and momentum is good. But beleaguered Citigroup shareholders will be hoping that the stock's current trajectory proves more durable than the October 2020 to June 2021 period when the stock similarly appeared to have finally found its footing.
Over the last 5 years, Citigroup has lost -6.8% of its value while JPMorgan and the S&P 500 index have gained +86.8% and +77.7%, respectively. Needless to say, it has been a painful run for Citigroup shareholders.
Citigroup is a turnaround story, and the market appears to appreciate the new management team's restructuring plan. Analysts covering the stock praise the planned organizational and business strategy changes, which they see as producing efficiencies and greater accountability.
We will get more updates on the company's repositioning progress as it reports Q1 results on Friday, April 12th, along with JPMorgan, Wells Fargo, and others.
Citigroup is expected to report $1.41 per share in earnings (down -24.2% year-over-year) on $20.3 billion in revenues (down -5.5%). A combination of pre-announced restructuring charges (that we and others see as very much 'recurring' and therefore hard to exclude), increased FDIC assessments, increased reserve additions, and a relatively flat to modestly down trading environment account for the year-over-year declines.
The hope in the Citigroup story is that this year proves to be the promised inflection point, particularly on the expense side, with the full benefit of the restructuring starting to show up next year and beyond.
JPMorgan, which will also report Friday morning with Citigroup, is expected to bring in $4.22 per share in earnings (up +2.9% year-over-year) on $40.8 billion in revenues (up +6.3% YoY).
Analysts have modestly raised their JPMorgan Q1 estimates, with broad industry-wide favorable trends on the deposits side, a steepening yield curve, and positive loan demand trends expected to produce upside on the net-interest income side. Trading activity was, at best, flat for JPMorgan, but investment banking will likely show some growth on the back of increased activity in the equity and debt capital markets.
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