Investors in Citigroup Inc have had a lot to digest recently. The company has issued a mixed bag of results that would leave anyone shaking their head.
The price of C shares has stayed relatively stable recently, at around $4.50 per share as investors weigh different scenarios for the company’s future.
On the one hand, people putting money into the company figure they’re getting their hands of shares of a company that once ruled the entire global financial market and still has a ton of great assets.
On the other hand, investing in Citigroup could become very dangerous. The company is extremely reliant on its huge portfolio of loans, and bad results could doom the company’s earnings. That’s why investors are concerned about Citigroup’s recent moves concerning loan losses.
In the latest reporting period, C built its loan loss reserves by $802 million. This was far less than the $3.9 billion they added for the prior quarter. Certainly the company isn’t expecting that vast of an improvement in loan repayments?
Evidence would suggest the contrary.
Non-accrual loans hit a remarkable $32.68 billion during the recent period. Non-accrual loans are loans that are not being paid the original, agreed-upon contractual interest rate. How much of this amount represents truly dead loans that will never be repaid remains unknown, but the amount must be huge.
Unemployment has stayed high, which is keeping investors being euphoric about C. If job losses stay high, loan repayments remain low. With the the numbers of loans that are not performing already so massive, can Citi really afford too many more bunk loans?
Citi is hoping that loan modifications will bring many of these debts bank from the brink. But if industry wide stats are to be believed, 75% of people who do a loan modification end up back in the soup within 12 months. Not exactly the type of success rate anyone wants to bet the bank on.
It seems that C shares could continue sideways for quite some time as investors watch and learn more about how the modifications are working for Citi. If they end up improving substantially, lots of folks might suddenly feel the urge to buy shares.
Priceline investors are very happy indeed today as the online discount travel website announced impressive second quarter earnings.
The first bit of good news came in the top line, where Priceline increased their bookings by 12.8 percent as travelers went online to find travel discounts. The company totalled $2.38 billion in bookings for [...]
Medicare is a very profitable business for Humana. The insurance company announced a quarter increase in earnings of 34%, due in large part to the company’s Medicare Advantage business.
Humana was among three companies poised to lose Tricare federal contracts to provide health coverage to U.S. military personnel in 11 southern states. Loss of the [...]
Fortune Brands Inc (NYSE:FO) has reported earnings that were higher than analysts expected. However, the company lowered their earnings forecast going forward.
Fortune Brands is the maker of Moen Faucets, Jim Beam alcohol and Titleist gold equipment. The company said cost cuttings had helped earnings.
For the quarter the company earned $99.8 million, [...]
Yahoo announced numbers for their second quarter that showed a reduction in revenues but a slight increase in net profit.
Revenue was down 13% as less companies spent money on advertising. But it wasn’t all bad news for the Internet’s second largest website.
The company said that net income was $141 million, or 10 [...]
Merck announced earnings today and said they were down 12% for the quarter in net profit. Wall Street hadn’t been expecting much, though, so the small earnings still managed to beat analyst expectations.
The maker of asthma and allergy treatment Singulair and cervical cancer vaccine Gardasil said its net income was $1.56 billion, or 74 [...]
Bank of America (NYSE: BAC) has reported net earnings of $2.4 billion for the second quarter. They are the latest of the major banks to announce earnings that are somewhat better than expected.
Earnings per share, which reflected a much higher amount of shares outstanding, fell to 33 cents from 72 cents. That [...]
One thing about a recession: even somewhat bad news can lift the spirits when it’s not as bad as originally expected. That’s what happened with General Electric (NYSE: GE).
GE performed poorly in the second quarter, in large part due to continuing weak performance at the GE Capital divisiion.
The company earned $2.9 billion, or [...]
Citigroup (NYSE: C) has suprised investors with their announcement of $4.3 billion in earnings for the second quarter. Anaylists had been expecting a huge loss, but Citigroup ending up selling its Smith Barney wealth management division for $6.3 billion to Morgan Stanley (NYSE: ME). The company said it earned 49 cents per share for the [...]