Citigroup (C) Stock Rises in Pre-Market Trading Today as Bank Awaits Stress Test Results

Shares of Citigroup (C) were up in pre-market trading Monday as the bank awaits the results of the Federal Reserve's stress test.
By Andrew Meola ,

NEW YORK (TheStreet) -- Shares of Citigroup  (C) - Get Report rose 0.78% to $52.83 in pre-market trading Monday as the bank awaits the results of the Federal Reserve's stress test.

CEO Michael Corbat's job is at risk, according to Bloomberg, as he waits to hear if the Fed will approve his 2015 capital plan after it rejected last year's offer. Corbat has publicly stated he should be held accountable for the plan, and both analysts and investors have intimated that the CEO could lose his job if his plan fails for a second consecutive year.

Many analysts also believe Citigroup has taken the appropriate measures, including spending $180 million to improve the company's capital planning processes, to make sure the plan obtains approval, Bloomberg notes.

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The Fed began stress testing the nation's largest banks in 2009 after the financial crisis called into question the stability of the nation's financial system. The first round of the test studies if banks have enough capital to endure nine quarters of stressful economic conditions. The second round determines the companies' ability to withstand losses and still pay dividends, repurchase shares, or make acquisitions.

The first set of results come in later this week, but the second set on March 11 is what would likely determine Corbat's job status, according to Bloomberg

Separately, TheStreet Ratings team rates CITIGROUP INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate CITIGROUP INC (C) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has significantly increased by 1537.12% to $27,291.00 million when compared to the same quarter last year. In addition, CITIGROUP INC has also vastly surpassed the industry average cash flow growth rate of 303.10%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 4.6%. Since the same quarter one year prior, revenues slightly dropped by 2.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, CITIGROUP INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The gross profit margin for CITIGROUP INC is rather low; currently it is at 22.63%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.66% significantly trails the industry average.
  • You can view the full analysis from the report here: C Ratings Report
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