Investing

Earnings Previews: Citigroup, UnitedHealth, US Bancorp, Wells Fargo

The three major U.S. equity indexes closed lower again Tuesday. The Dow Jones industrials closed down 0.6%, the S&P 500 dropped 0.92% and the Nasdaq shed 0.95%. All 11 S&P sectors closed lower. Energy (down 1.9%) and tech (down 1.4%) took the biggest hits. Wednesday morning’s report on the consumer price index (CPI) came in worse than economists had predicted. CPI rose 1.3% month over month and 9.1% year over year. Following the report, all three major indexes sank in Wednesday’s premarket session.

Before markets opened on Tuesday, Delta Air Lines released a mixed report for its second quarter. The airline missed the earnings per share (EPS) estimate but beat on sales. The stock traded up about 0.7% in Wednesday’s premarket.

Fastenal beat estimates on both the top and bottom lines, but the increases were small. Reported EPS was a penny better than estimates, and revenue beat estimates of $1.77 billion by less than $6 million. Shares traded down about 6% in premarket action.

The June-quarter earnings season gets rolling Thursday morning with several notable earnings reports. We already have previewed analysts’ expectations for Conagra, Ericsson, JPMorgan, Morgan Stanley and Taiwan Semiconductor.

Here is a look at four companies on deck to report quarterly results first thing Friday morning.

Citigroup

Shares of Citigroup Inc. (NYSE: C) have dropped about 30% over the past 12 months. The stock posted its 52-week low a week ago, after hovering around that level for the past few weeks. Of the nation’s half-dozen largest banks, Citi has put up the biggest share price losses over the past year.

While Citi’s second-quarter trading revenue is expected to rise, consumers’ worries about inflation could hit credit card spending. Combined profits at the six largest banks are expected to be 10% lower sequentially and down 35% year over year.

Analysts seem to be content to wait on the sidelines. Of 25 brokerages covering the company, 12 have a Hold rating on the shares, and 12 have a Buy or Strong Buy rating. At a recent share price of around $46.10, the upside potential based on a median price target of $58.00 is 25.8%. At the high price target of $81.00, the upside potential is 75.7%.

Second-quarter revenue is forecast at $18.29 billion, which would be down 4.7% sequentially and up 4.7% year over year. Adjusted EPS are forecast at $1.65, down 18.2% sequentially and nearly 42% lower year over year. For the full 2022 fiscal year, analysts are currently forecasting EPS of $6.74, down 33.5%, on revenue of $73.24 billion, up 1.9%.


Citigroup stock trades at 6.8 times expected 2022 EPS, 6.8 times estimated 2023 earnings of $6.81 and 6.0 times estimated 2024 earnings of $7.74. The stock’s 52-week range is $44.93 to $74.64, and Citi pays an annual dividend of $2.04 (yield of 4.42%). The total return to shareholders for the past year was negative 31.4%.

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