Seeking Alpha
What is your profession? ×
, Estimize (156 clicks)
Hedge fund trader, long/short equity
Profile| Send Message|
( followers)

Citigroup, Inc. (NYSE:C) is set to report FQ1 2014 earnings before the market opens on Monday, April 14. Citigroup is one of the largest banks in the United States and has been in headlines lately for all the wrong reasons. On March 26, the Federal Reserve rejected Citigroup's plan to boost its dividend and buyback more shares of company stock. On Friday, two peer banks both reported earnings, JPMorgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC). JPMorgan missed earnings projections badly and the company stock fell 3.66%. On the other hand, Wells Fargo beat analysts' profit expectations by over 7%. After Citi failed the Fed's recent stress test and had its capital plan rejected, analyst expectations on the platform plunged. Here's what investors expect from Citigroup on Monday morning.

The information below is derived from data submitted to the platform by a set of Buy Side and Independent analyst contributors.(click to enlarge)

Click here to see Estimates and Interactive Features for Citigroup.

The current Wall Street consensus expectation is for Citigroup to report $1.18 EPS and $19.620B revenue, while the current consensus from 17 Buy Side and Independent contributing analysts is $1.14 EPS and $19.394B in revenue. This quarter, the buy side -- as represented by the community -- is expecting Citigroup to miss the Wall Street consensus on both EPS and revenue.

Over the past six quarters the consensus from has been more accurate than Wall Street in forecasting WFC's EPS and revenue three times each. 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 more accurate than Wall Street up to 69.5% of the time, but more importantly it does a better job of representing the market's actual expectations. It has been confirmed by Deutsche Bank Quant Research and an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.

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 small to moderate differential between the two groups' expectations.

(click to enlarge)

The distribution of estimates published by analysts on the platform range from $1.01 to $1.24 EPS and from $18.550B to $19.993B in revenues. This quarter we're seeing a moderate distribution of estimates on Citigroup.

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 of estimates signaling less agreement in the market, which could mean greater volatility post-earnings. (click to enlarge)

Over the past four months the Wall Street EPS consensus fell from $1.44 to $1.18, while the Estimize consensus dropped from $1.35 to $1.14. Meanwhile, the Wall Street revenue consensus declined from $20.225B to $19.620B, while the Estimize forecast sank from $21.145B to $19.394B. Timeliness is correlated with accuracy and downward analyst revenue revisions at the end of the quarter are often a bearish indicator.(click to enlarge)

The analyst with the highest estimate confidence rating this quarter is BradHewitt91, who projects $1.15 EPS and $19.450B in revenue. BradHewitt91 is ranked 13th overall among over 4,000 contributing analysts. Over the past year, BradHewitt91 has been more accurate than Wall Street in forecasting EPS and revenue 52% and 50% of the time, respectively, throughout 664 estimates. 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, BradHewitt91 is expecting Citigroup to outperform the low bar set by the Estimize community.

On Friday, JPMorgan and Wells Fargo told conflicting tales about the banking industry through their earnings reports. Things have been rough on Citigroup lately and sentiment on the platform has fallen dramatically since Citi's capital plan was rejected by the Federal Reserve. This quarter contributing analysts on the platform are expecting Citi to fail meet Wall Street's expectations on both EPS and revenue.

Disclosure: None.