Citigroup (C) Up 7.2% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Citigroup (C). Shares have added about 7.2% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Citigroup due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers. Citigroup Q3 Earnings Beat Estimates, IB Revenues Increase 31% Y/YCitigroup third-quarter 2024 adjusted net income per share of $1.51 surpassed the Zacks Consensus Estimate of $1.34. The metric decreased 0.7% from the year-ago quarter.As expected, Citigroup posted a year-over-year increase of 31% in Investment Banking (IB) revenues, driven by strength in Debt Capital Markets. The company also witnessed a rise in total loans and deposits balance in the quarter. However, provisions for credit losses increased.Net income (GAAP basis) in the quarter was $3.2 billion, which decreased 8.6% from the prior-year quarter.Citigroup’s Revenues Increase, Expenses DecreaseRevenues, net of interest expenses, moved up 1% year over year to $20.32 billion in the third quarter. The top line surpassed the Zacks Consensus Estimate of $19.90 billion. Excluding divestiture-related impacts, primarily consisting of the nearly $400 million gain from the sale of the Taiwan consumer banking business in the prior-year period, revenues rose 3% year over year.NII fell 3% year over year to $13.36 billion, while NIR increased 10% to $6.9 billion.Citigroup’s operating expenses declined 2% year over year to $13.25 billion, both on a reported basis and excluding divestiture-related impacts. This decrease in expenses was primarily due to savings associated with the company’s organizational simplification and stranded cost reductions, partially offset by volume-related expenses, continued investments in transformation and other risks, and control initiatives.Citigroup’s Segmental PerformanceIn the Services segment, total revenues, net of interest expenses, were $5.02 billion in the reported quarter, up 8% year over year. The increase primarily reflects continued momentum across Securities Services and Treasury, and Trade Solutions.The Markets segment’s revenues increased 1% year over year to $4.82 billion, driven by growth in Equity markets’ revenues, partially offset by lower Fixed Income markets’ revenues.Banking revenues of $1.59 billion moved up 16% year over year, primarily driven by growth in IB.U.S. Personal Banking’s revenues were $5.05 billion, up 3% from the prior-year quarter, driven by higher net interest income due to loan growth in cards and higher non-interest revenues due to lower partner payments.In the Wealth segment, revenues were $2 billion in the reported quarter, rising 9% year over year. The increase was driven by a 15% rise in non-interest revenues, reflecting higher investment fee revenues on momentum in client investment assets, as well as a 6% increase in net interest income due to higher deposit volumes and spreads.Revenues in the All Other segment declined 18% year over year to $1.83 billion.Citigroup’s Balance Sheet Position StrongAt the end of the third quarter, Citigroup’s deposits were up 2% from the prior quarter’s levels to $1.31 trillion. Also, its loans increased marginally on a sequential basis to $689 billion.Citigroup's Credit Quality: Mixed BagTotal non-accrual loans fell 34% year over year to $2.20 billion.  However, C’s provisions for credit losses and benefits and claims for the third quarter were $2.67 billion, up 45% from the year-earlier quarter.Nonetheless, the allowance for credit losses on loans was $22.1 billion, up 9.4% from the prior-year quarter’s levels.Citigroup's Capital Position StrongAt the end of the third quarter, the bank’s Common Equity Tier 1 capital ratio was 13.7%, up from 13.6% in the third quarter of 2023. However, the company’s supplementary leverage ratio in the reported quarter was 5.8% compared with 6% in the prior year.Citigroup's Capital Deployment SolidIn the reported quarter, Citigroup returned $2.1 billion to shareholders through common share dividends and share repurchases.Outlook4Q24Management expects fourth-quarter NII (excluding Markets) to be flat on a sequential basis.2024Management anticipates revenues of $80-$81 billion, driven by fee growth in the Services segment and a rebound in the IB business.NII (excluding Markets) is projected to be slightly down year over year.Management anticipates expenses at the higher end of $53.5-$53.8 billion (excluding FDIC special assessment and Civil Money Penalties), suggesting a decline from the $56.4 billion reported in 2023.For 2024, net credit losses are anticipated to be 3.5-4% in the company’s branded cards business and 5.75-6.25% in retail services.Medium-Term Targets – 2026Management expects revenue to grow $87-$92 billion, witnessing a CAGR of 4-5% in the medium term.The company anticipates expenses of $51-$53 billion, excluding FDIC fees, indicating a decline from the $56.4 billion reported in 2023.Management expects the return on tangible common equity to be 11-12%.The efficiency ratio is expected to be more than 60%.How Have Estimates Been Moving Since Then?It turns out, fresh estimates have trended downward during the past month.The consensus estimate has shifted -6.43% due to these changes.VGM ScoresAt this time, Citigroup has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Citigroup has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Free: 5 Stocks to Buy As Infrastructure Spending SoarsTrillions of dollars in Federal funds have been earmarked to repair and upgrade America’s infrastructure. 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