Citibank Beats EPS During the Quarter, But The Stock Sold Off
Citibank reported their earnings on Friday. The earnings per share beat forecast, but their revenue was slightly under the forecast.
Here is how Citigroup's second-quarter results fared against Wall Street estimates:
Earnings: $1.63 per share vs $1.56 forecast by Thomson Reuters
Revenue: $18.469 billion vs $18.512 billion expected by Reuters
The company also said its earnings per share grew by 27 percent on a year-over-year basis as net income rose 16 percent to $4.49 billion and as its shares outstanding decreased by 8 percent. Citigroup said the rise in net income was driven by a lower effective tax rate, which fell to 24 percent from 32 percent.
OK, so lets read between the lines. EPS beat forecast. This means nothing because earnings per share can be fabricated, they call it financial engineering. Citibank, like other companies have been buying back their shares. Thus, the same revenue/income gets spread over less shares, creating an artificial boost in EPS. Lastly, their net income rose as a result of the Trump tax cuts. This is definitely not a company to own, so sell below $65, 1st target is $60 and 2nd target is $50.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
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by rollandthomas
Earnings being manipulated by the factors you mentioned but many companies will struggle to grow sales as the cracks in the economy will begin to show this quarter. Imagine when the impact of the trade wars begin to show!
Great point, do you think the trade wars will last into the Fall or will one side give in sooner?
This could definitely linger with the approach they are taking which is concerning because I don’t think they are taking into consideration how fragile the consumer really is.