Citigroup (C) Stock Slipping After Pleading Guilty, Fined $925 Million

NEW YORK (TheStreet) -- Shares of Citigroup Inc  (C) were lower by 0.67% to $54.96 in afternoon trading Wednesday, after the bank was charged $925 million in criminal fines as part of their guilty plea over the manipulation of foreign exchange rates, Reuters reports.

Five of the world's largest banks, including Citigroup were fined a total of $5.7 billion to resolve an investigation into whether the banks worked together to move foreign currency rates in their favor.

The other banks include J.P. Morgan Chase & Co. (JPM), Barclays PLC (BCS), Royal Bank of Scotland Group PLC (RBS), and UBS  (UBS).

The fines follow agreements in November with some of the same banks over currency trading, which brings the total penalties to about $9 billion, Reuters noted.

Separately, the Fed fined Bank of America Corp (BAC$205 million for unsound practices in foreign exchange, according to Reuters.

New York City-based Citigroup is a financial services holding company engaged in providing financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management.

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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