Wednesday, October 16, 2019

An Okay Quarter From Citigroup Arguably Not Good Enough

Citigroup (C) did manage a beat for the third quarter, but a small beat that was definitely overshadowed by many of its large peers is not what the company/stock needs to shift sentiment in a more positive direction. I don’t want to be too harsh about a quarter that was only a little off in terms of the core drivers, but Citi management isn’t really doing much to instill confidence in a longer-term ROTCE target that the Street already finds dubious.

The good news is that I believe Citi continues to out-earn its cost of capital and will continue to do so. Surplus capital can continue to go towards share buybacks, and the company’s digital-based growth strategy has some chance of separating the company from the pack. I still believe that the slow pace of improvement could attract more aggressive pushes for restructuring and/or new management, and I believe these shares are undervalued, but again, I’ll reiterate that it’s going to take time for this to work out and a lagging large-cap bank at the end of the cycle is not typically a recipe for outsized outperformance.

Read the full article here:
An Okay Quarter From Citigroup Arguably Not Good Enough

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