Markets did not respond well to Citigroup’s (C) quarterly earnings report. The stock lost 5.1% after posting revenue growth and earnings beating estimates.
Citi posted Q3 GAAP EPS of $1.51. Revenue grew by 0.9% Y/Y to $20.32 billion. Investors did not like Citi’s cost of credit growth. It increased by $2.7 billion in Q3, compared to $1.8 billion last year. Higher net credit losses and a rise in allowance for credit losses (“ACL”) worried markets.
Citi trades at a modest premium compared to the sector. Its P/E is 11.5 times, compared to the sector median of 12.3 times. Value investors may accumulate C stock if prices fall further.
In the energy sector, worries about the Israel/Iran conflict are declining. This sent crude oil prices down by up to 5% yesterday. Israel may not strike oil or nuclear facilities in Iran. Instead, it will target military areas. Furthermore, Israel could target companies that manufacture drones.
Global oil demand is slowing. In Q3, demand increased by 680,000 bbl/day. This is the slowest rate and comparable to Q4/2022. Back then, China fully locked down its economy. ETF investors may consider USO, SCO, or XLE. Companies to consider include Halliburton (HAL), Devon Energy (DVN), and APA Corp (APA).
