NEW YORK (TheStreet) -- Shares of Citigroup (C) are down 2.36% to 55.04 after it was reported that the U.S. bank will take about $3.5 billion in legal and restructuring charges in the fourth quarter, as it prepares to settle allegations of wrongdoing in rate-setting and anti-money laundering and make more redundancies, the Financial Times reports.
CEO Mike Corbat announced the charges on Tuesday at a banking conference held by Goldman Sachs, the FT said.
They will come close to wiping out Citigroup's expected profit for the quarter, according to analysts' estimates. Citigroup, though, expects to be marginally profitable, the FT added.
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 a number of 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 revenue growth, attractive valuation levels, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- C's revenue growth has slightly outpaced the industry average of 1.3%. Since the same quarter one year prior, revenues slightly increased by 4.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- 35.43% is the gross profit margin for CITIGROUP INC which we consider to be strong. Regardless of C's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, C's net profit margin of 12.38% is significantly lower than the industry average.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- CITIGROUP INC's earnings per share declined by 10.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings 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. For the next year, the market is expecting a contraction of 21.3% in earnings ($3.35 versus $4.25).
- You can view the full analysis from the report here: C Ratings Report