Why Citigroup (C) Stock Is Spiking Today

NEW YORK (TheStreet) -- Shares of Citigroup Inc. (C) are higher by 3.17% to $48.49 on heavy volume in early afternoon trading on Monday.

The company saw a rise in its stock after reporting better than expected revenue from equity and fixed income trading for the 2014 second quarter, which had declined 15% to $2.9 billion, but did not decline the 20% to 25% decline the company previously anticipated, CNBC reports.

Citigroup's net income was down 96% to $181 million, or 3 cents per share, versus $4.18 billion, or $1.34 from the 2013 second quarter.

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However, when excluding special items net income was $1.24 per share, beating analysts' expectations of $1.05, CNBC added.

Additionally, Citigroup announced today that it has reached a $7 billion settlement with the Department of Justice regarding an investigation into the mortgage securities the bank sold leading up to the financial crisis.

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

"We rate CITIGROUP INC (C) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, attractive valuation levels, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

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

  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Commercial Banks industry average. The net income increased by 3.5% when compared to the same quarter one year prior, going from $3,808.00 million to $3,943.00 million.
  • CITIGROUP INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CITIGROUP INC increased its bottom line by earning $4.25 versus $2.46 in the prior year. This year, the market expects an improvement in earnings ($4.54 versus $4.25).
  • 38.78% is the gross profit margin for CITIGROUP INC which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, C's net profit margin of 16.62% significantly trails the industry average.
  • C, with its decline in revenue, slightly underperformed the industry average of 2.6%. Since the same quarter one year prior, revenues slightly dropped by 3.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: C Ratings Report
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