|
Related Topics
|
Category: Stock Market and CitiGroup (C)
Date: 15 January 2021 Stock Price of CitiGroup (C): $65.42 We take a look at the 4th quarter earnings report of their 2020 fiscal year of Citigroup one of the biggest financial institutions in the world with revenues of $16.5 billion and net income of $4.63 billion for the 4th quarter of their 2020 fiscal year.
|
Michael Corbat, Citi CEO -We ended a tumultuous year with a strong fourth quarter. As a sign of the strength and durability of our diversified franchise, our revenues were flat to 2019, despite the massive economic impact of COVID-19. For the year, we generated $11 billion in net income despite our credit reserves increasing by $10 billion as a result of the pandemic"
About Citigroup
Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.
Overview of Citigroup's 4th quarter 2021 earnings report
Data below refers to the latest quarterly data unless specified otherwise:
- Revenue: $16.499 billion (up from $18.37 billion for the same period of the previous year)
- Revenues decreased by -10% over the last 12 months
- Operating costs and expenses : $10.7 billion (up from $10.45 billion for the same period of the previous year)
- Operating costs and expenses increased by 2% over the last 12 months
- Net income: $4.632 billion (down from $4.979 billion for the same period of the previous year)
- Diluted earnings per share: $2.08 (down from $2.15 for the same period of the previous year)
- PE ratio of Citigroup: 7.9
- Diluted weighted-average shares outstanding: 2.095 billion (down from 2.166 billion for the same period of the previous year)
- Book value per share: $86.59 (up 4% from $82.90 for the same period of the previous year)
- Cash and cash equivalents: $26.35 billion
- Cash and cash equivalents per share: $12.55
- Cash and cash equivalents makes up 19.2% of Citigroup's market capital
- Cash and cash equivalents makes up 1.16% of Citigroup's total assets
- Loans net of allowances for losses: $650.9 billion
- Loans net of allowances makes up 28.7% of Citigroup's total assets
- Goodwill: $22.162 billion
- Goodwill makes up 0.98% of Citigroup's total assets
- Goodwill per stock: $10.57
- Stockholders equity in Citigroup: $200.5 billion
- Stockholders equity per share: $95.70
- So Citigroup is trading a 0.69 times its stockholders equity which is well outside the expected range of between 2 and 6 which most firms tend to trade at.
- For some perspective the average price to book value of firms in the S&P 500 is 3.9times
Citigroup's management commentary on their 3rd quarter 2020 earnings report
New York, January 15, 2021 – Citigroup Inc. today reported net income for the fourth quarter 2020 of $4.6 billion, or $2.08 per diluted share, on revenues of $16.5 billion. This compared to net income of $5.0 billion, or $2.15 per diluted share, on revenues of $18.4 billion for the fourth quarter 2019
Michael Corbat, Citi CEO, said, “We ended a tumultuous year with a strong fourth quarter. As a sign of the strength and durability of our diversified franchise, our revenues were flat to 2019, despite the massive economic impact of COVID-19. For the year, we generated $11 billion in net income despite our credit reserves increasing by $10 billion as a result of the pandemic and the impact of CECL. “We remain very well capitalized with robust liquidity to serve our clients. Our CET 1 ratio increased to 11.8%, well above our regulatory minimum of 10%. Our Tangible Book Value per share increased to $73.83, up 5% from a year ago. Given the Federal Reserve decision regarding share repurchases as we have excess capital we can return to shareholders, we plan to resume buybacks during the current quarter
Michael Corbat, Citi CEO, said, “We ended a tumultuous year with a strong fourth quarter. As a sign of the strength and durability of our diversified franchise, our revenues were flat to 2019, despite the massive economic impact of COVID-19. For the year, we generated $11 billion in net income despite our credit reserves increasing by $10 billion as a result of the pandemic and the impact of CECL. “We remain very well capitalized with robust liquidity to serve our clients. Our CET 1 ratio increased to 11.8%, well above our regulatory minimum of 10%. Our Tangible Book Value per share increased to $73.83, up 5% from a year ago. Given the Federal Reserve decision regarding share repurchases as we have excess capital we can return to shareholders, we plan to resume buybacks during the current quarter
“Looking back, I am proud of the progress the firm has made since I became CEO. We have streamlined our consumer business and embraced the shift to digital so we can serve our clients the way they want to be served. We have re-established Citi as a go-to bank for our institutional clients through our global network. “Before the pandemic slowed our progress, we had steadily improved our returns and dramatically increased the return of capital to our shareholders. Notably, we went from having a one penny dividend to returning over $85 billion in capital since 2013 and we have reduced our share-count by 30%. Jane has a great foundation to build upon and I am certain great things are in store for Citi and all its stakeholders,” Mr. Corbat concluded.
Citigroup’s allowance for credit losses on loans was $25.0 billion at quarter end, or 3.73% of total loans, compared to $12.8 billion, or 1.84% of total loans, at the end of the prior-year period. Total non-accrual assets grew 40% from the prior-year period to $5.7 billion. Consumer non-accrual loans increased 18% to $2.1 billion, while corporate non-accrual loans of $3.5 billion increased 61% from the prior-year period.
Citigroup’s end-of-period loans were $676 billion as of quarter end, down 3% from the prior-year period on a reported basis and 4% excluding the impact of foreign exchange translation5 , driven by declines across GCB and ICG, and the continued wind-down of legacy assets in Corporate / Other
Citigroup’s end-of-period deposits were $1.3 trillion as of quarter end, an increase of 20% on a reported basis and 19% in constant dollars, driven by an 18% increase in GCB and a 19% increase in ICG.
Citigroup’s book value per share of $86.59 and tangible book value per share of $73.83 increased 4% and 5%, respectively, largely driven by net income. At quarter end, Citigroup’s CET1 Capital ratio was 11.8%, an increase from the prior quarter. Citigroup’s SLR for the fourth quarter 2020 was 7.0%, an increase from the prior quarter. During the quarter, Citigroup returned a total of $1.1 billion to common shareholders in the form of dividends
Citigroup’s allowance for credit losses on loans was $25.0 billion at quarter end, or 3.73% of total loans, compared to $12.8 billion, or 1.84% of total loans, at the end of the prior-year period. Total non-accrual assets grew 40% from the prior-year period to $5.7 billion. Consumer non-accrual loans increased 18% to $2.1 billion, while corporate non-accrual loans of $3.5 billion increased 61% from the prior-year period.
Citigroup’s end-of-period loans were $676 billion as of quarter end, down 3% from the prior-year period on a reported basis and 4% excluding the impact of foreign exchange translation5 , driven by declines across GCB and ICG, and the continued wind-down of legacy assets in Corporate / Other
Citigroup’s end-of-period deposits were $1.3 trillion as of quarter end, an increase of 20% on a reported basis and 19% in constant dollars, driven by an 18% increase in GCB and a 19% increase in ICG.
Citigroup’s book value per share of $86.59 and tangible book value per share of $73.83 increased 4% and 5%, respectively, largely driven by net income. At quarter end, Citigroup’s CET1 Capital ratio was 11.8%, an increase from the prior quarter. Citigroup’s SLR for the fourth quarter 2020 was 7.0%, an increase from the prior quarter. During the quarter, Citigroup returned a total of $1.1 billion to common shareholders in the form of dividends
Citigroup (NYSE: C) stock price chart over the last 5 years
The image below shows the stock price history of Citi (C) over the last 5 years. And its been a good time for Citi (C) stockholders with the stock increasing by 87.9% over the last 5 years. No investor would say no to those kind of returns.
The stock of Citi (C) is trading at closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Citi's stock is positive at this point in time.
The stock of Citi (C) is trading at closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Citi's stock is positive at this point in time.
Citigroup (C) stock vs JPMorgan Chase (JPM) stock vs BlackRock (BLK) over the last 5 years
The image below shows the stock price performance of BlackRock, Citigroup and JPMorgan Chase over the last 5 years. While all three are very large financial services providers their stock price trends and returns over the last 5 years are very different. The summary below shows the stock price returns provided by the three companies over the last 5 years:
- JPMorgan Chase: 159.9%
- BlackRock: 147.9%
- Citigroup: 87..9%
Citigroup (NYSE: C) latest stock valuation
So what is Citigroup stock worth based on the release of their 4th quarter 2020 earnings report? Based on Citigroup's latest earnings report our valuation models provide a target price (full value price) for Citigroup stock at $96.80 a stock. We therefore believe that the stock of Citigroup is significantly undervalued at its current price of $65.42
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $96.80. Therefore we believe a good entry point into Citigroup stock is at $87.10 or below.
Since the stock of Citigroup is selling at well below our target price (full value price) and our suggested entry point we rate the stock of Citigroup as a buy
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $96.80. Therefore we believe a good entry point into Citigroup stock is at $87.10 or below.
Since the stock of Citigroup is selling at well below our target price (full value price) and our suggested entry point we rate the stock of Citigroup as a buy
Next earnings release date for Citigroup
It is expected that Citigroup (NYSE: C) will release their 1st quarter 2021 earnings report in mid January 2021