What The Buy Side Is Saying About Citigroup

Jan.15.14 | About: Citigroup Inc. (C)

Earnings season is now underway and Citigroup (NYSE:C) is set to release FQ4'2013 earnings before the market opens on Thursday, January 16th. Tuesday morning we saw JPMorgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC) report tepid results with mixed reaction from investors. On Wednesday Bank of America (NYSE:BAC) released better than expected results and pushed financial stocks including Citigroup higher. Here is what hedge funds and other investors are expecting from Citigroup this quarter.

The information below is derived from data submitted to the Estimize platform by a set of Buy Side and Independent analyst contributors.image

The current Wall Street consensus expectation is for C to report 95 cent EPS and $18.252B revenue while the current Estimize consensus from 20 Buy Side and Independent contributing analysts is $1.06 EPS and $18.574B revenue.

Citigroup has beaten the Wall Street profit consensus four times over the past six quarters. In each of these four quarters the Estimize consensus from Buy-side and Independent contributing analysts has been more optimistic than Wall Street and therefore more accurate. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students and non professional investors Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market's actual expectations.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing a moderate difference between the expectations.image

The distribution of estimates published by analysts on Estimize range from 95 cents to $1.30 EPS and $18.110B to $21.300B in revenues. This quarter we're seeing a moderate distribution of estimates relative to previous quarters, with some contributors expecting C to outperform the Wall Street consensus on revenue by a wide margin. The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution signaling the potential for greater volatility post earnings, or smaller vice versa.image

Over the past four months we have seen downward analyst revisions on Citigroup, especially at the end of the quarter. This quarter the Estimize EPS consensus has fallen from $1.25 to $1.06 while the Wall Street expectation has decreased from $1.16 to 95 cents. The Wall Street revenue expectation has declined from $19.410B to $18.252B while Estimize has reduced its consensus from $19.992B to $18.574B. Rapidly sinking analyst revisions going into an earnings report an often a bearish indicator.

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The analyst with the highest estimate confidence rating this quarter is goblue87 who projects $1.02 EPS and $18.201B in revenue. In the winter 2014 season, goblue87 is currently ranked as the 25th best analyst and is ranked 38th overall among over 3,400 contributing analysts. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case the highest rated analyst is expecting C to beat the Street on profit but come up slightly short of the Wall Street expectations for revenue.image

Throughout the past two years C has met or exceeded the Wall Street profit consensus four times. Although they are only batting .500 by this measure, contributing analysts on the Estimize platform are expecting Citigroup to beat the Street by a decent margin on Thursday.

Disclosure: None.