You don’t have to be a rocket scientist to figure out the difficulty banks are facing right now. The headwinds are really making it tough, especially for the big banks. Not only do you have a regulatory environment that is less than favorable, but you also have trading desks shrinking and razor thin net interest margins. Add that up with the stigma of the bailout and the mortgage crisis and it’s no wonder that the big banks are having trouble.
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The story is the same here with Zacks Rank #5 (Strong Sell) Citigroup (C). Citigroup is a diversified financial services holding company that provides various financial products and services for consumers, corporations, governments and institutions worldwide. It operates through two segments, Citicorp and Citi Holdings. The Citicorp segment offers traditional banking services to retail customers through Citibank. Citi Holdings provides consumer loans, portfolio securities, loans and other assets and retail alternative investment services.
Citi is all set to report earnings before the market open on April 15th. The Zacks Consensus Estimate for the quarter has dropped considerably over the last sixty days. Five analysts have decreased their earnings estimates for the current quarter while six have done so for the current year. The bearish sentiment has brought the Zacks Consensus Estimate from $1.52 all the way down to $1.19 for the current quarter. The current year number has dropped from $5.70 to $4.95. Citigroup has managed to beat the consensus each of the previous four quarters. The average beat was by 7 cents.
Shares of Citi have retreated since peaking above $60 in July. They found support near $47.50 and managed to rally into November highs at $56.46 before dipping again to fresh lows below $35. The last push higher stalled out shy of $45 and currently the stock has dipped below its 20 day moving average. That’s a bearish sign for an already bearish situation. If shares of C get below $40.50 it could be a slippery slope all the way back down to the lows.
There are no stocks in the major regional banks industry that are above Zacks Rank #3 (Hold) ratings. But two of those stocks you can take a look at are Northern Trust (NTRS) and US Bancorp (USB).
Be sure to click FOLLOW THE AUTHOR above to stay on top of all the hot momentum stocks at Zacks.com. David Bartosiak is the Momentum Stock Strategist with Zacks, editor of the Momentum Trader and Home Run Investor, and host of “Trending Stocks”