Will Citigroup (C) Stock be Impacted by Continuing Troubles in Argentina?

NEW YORK (TheStreet) -- An Argentine court is preventing Citigroup's (C) unit in the South American country from taking further steps in withdrawing from its role as custodian of some of Argentina's sovereign bonds as a battle with U.S. creditors over unpaid debts continues, Reuters reports.

A court handed down the ruling on Monday.

Last month, the Argentine government announced that it was suing Citibank Argentina for coming to, what it calls, an illegal deal with hedge funds based in New York that are fighting for full payments on defaulted debts, Reuters said, adding that Citigroup believes itself to be an innocent party caught up in a bitter legal battle.

Previously Argentina has suspended the bank from any capital market operations and removed its CEO from authority.

Shares of Citigroup are up by 0.26% to $54.81 in pre-market trading on Tuesday morning.

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 several positive factors, 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, expanding profit margins, solid stock price performance and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."

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

  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Commercial Banks industry average. The net income increased by 21.0% when compared to the same quarter one year prior, going from $3,943.00 million to $4,770.00 million.
  • 41.91% is the gross profit margin for CITIGROUP INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 20.95% trails the industry average.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. 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 has improved earnings per share by 23.8% in the most recent quarter compared to the same quarter a year ago. 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 reported lower earnings of $2.19 versus $4.25 in the prior year. This year, the market expects an improvement in earnings ($5.48 versus $2.19).
  • C, with its decline in revenue, slightly underperformed the industry average of 0.8%. Since the same quarter one year prior, revenues slightly dropped by 4.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • You can view the full analysis from the report here: C Ratings Report

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