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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