A proforma income statement for Citigroup, using a minimum of 3 year projections
ID: 2801207 • Letter: A
Question
A proforma income statement for Citigroup, using a minimum of 3 year projections. This requires citi groups latest 10-k annual report. The question for this assignment is to find projections from 2017-2020 for income statement proforma. Please help using information below.oo Verizon LTE * 94%- 8:14 AM citigroup.com CONSOLIDATED STATEMENT OF INCOME Years ended December 31 Intcrest revenu Intcrest expemse Net interest revenue 57,615 S 12.511 45,104 S 18521 S 7,588 58.551 11,921 11.,848 Principal tranoactions Administration and other fidaciary fee Realized gains on sales of imvestments, net ,364 682 cr-than-lempoeary impairment losses on investments Gross impairment losses Less: Impairments recognized in AOCI (620) 265 losses recogniized in camings 36 S Other revene Total non-interest revenues Total revenues, net of interest espense 5.958 29,724 2137 24,771 S 69,875 S eredit losses and Provision for loan losses Policyholder bencfits and claims Provision (relcase) for unfunded lending commitments Total provisions for eredit losses and for benefits and claims Operating esses Coespensation and benefits Premises and equipment 6749 S 73 6,982 S 7.913 20,970 S 2542 21,769 Advertising and markcting Other operating 1632 ,587 6,581 1,547 10,840 espenses 24,826 Income from continuing operations before income taxes Provision Sor income taxes Income from continulng operations 21477 15,833 Income (loss) from discontinued operations Provision (benetit) foe income taxes Lass from discontinued eperations, met of tases Net income befere attribetion of nonceatrolling interestsS Noncontrolling interests Citigroup's pet iaceme ) $ (83) (58) s 4,975 17,332 Basic earnings per shareh Income from costinuing operations Loss from discontinued eperations, net of taxes 4.74 S (042) (0.02) Weighted average common shares outstanding 129
Explanation / Answer
Based on the current financial data and the vision for 2020 for citigroup I have come up with an estimation along with few important ratios:
Annual Income Statement Data
Actuals in M $
Estimates in M $
Fiscal Period December
2014
2015
2016
2017
2018
2019
Sales
77 272
76 100
69 875
71 583
74 100
76 801
EBITDA
-
-
-
-
-
-
Operating profit (EBIT)
21 824
32 485
28 459
28 051
29 719
30 918
Pre-Tax Profit (EBT)
-
-
-
-
-
-
Net income
6 691
16 249
13 640
14 492
14 988
15 598
P/E ratio
24,6
9,58
12,6
14,3
12,8
11,1
EPS ( $ )
2,20
5,40
4,72
5,31
5,90
6,83
Dividend per Share ( $ )
0,04
0,16
0,42
0,96
1,46
1,82
Yield
0,07%
0,31%
0,71%
1,27%
1,92%
2,41%
Reference price ( $ )
54.11
51.75
59.43
75.71
75.71
75.71
Financial Ratios
Size
2017e
2018e
Capitalization
200 177 M$
-
Entreprise Value (EV)
-
200 177 M$
Valuation
2017e
2018e
P/E ratio (Price / EPS)
14,3x
12,8x
Capitalization / Revenue
2,80x
2,70x
Yield (DPS / Price)
1,27%
1,92%
Price to book (Price / BVPS)
0,95x
0,90x
Profitability
2017e
2018e
Operating Margin (EBIT / Sales)
39,2%
40,1%
operating Leverage (Delta EBIT / Delta Sales)
-
1,69x
Net Margin (Net Profit / Revenue)
20,2%
20,2%
ROA (Net Profit / Asset)
0,85%
0,86%
ROE (Net Profit / Equities)
6,91%
7,33%
Rate of Dividend
18,1%
24,7%
Balance Sheet Analysis
2017e
2018e
Cash Flow / Sales
24,5%
26,5%
Capital Intensity (Assets / Sales)
23,8x
23,5x
Yearly Earnings Forecasts
Fiscal
Consensus
High EPS*
Low EPS*
Number of
Year End
EPS* Forecast
Forecast
Forecast
Estimates
Dec 2017
5.31
5.39
5.24
9
Dec 2018
5.95
6.4
5.55
9
Dec 2019
6.87
7.58
6.03
5
Dec 2020
8.4
8.4
8.4
1
Citigroup has set its 2020 EPS target at $9.
Management has also discussed how it will get there with some granularity at its investor day.
Operating leverage gains should see it through to its target.
Capital return gives us a margin of safety while the target suggests over 50% upside is attainable.
Citigroup held an investor conference today and revealed its 2020 EPS target. That’s only two and a half years out, so investors need to take note. If Citi can get to its $9 2020 EPS target, it’s trading at 7.5x EPS. In the meantime, there’s the small matter of $19bn of combined buybacks and dividends to consider in each of 2018 and 2019.
There was a lot of discussion of the targets in the management presentation, which I would urge you to listen to.
These targets give us attractive return parameters. If Citi warrants a PE of 10x EPS by 2020, we are looking at $90 a share. If it warrants 12x EPS, we are looking at $108 per share so capital appreciation of 32-58% is in prospect while the 2018-19 distribution amounts to > 20% of the current market cap, which gives confidence of support for the stock. The question is whether Citi can get to that $9 horizon.
Let’s take a continuation of slow and steady global growth as given and look at the key mechanics within Citi itself.
There are, broadly speaking, two main struts to the investment case for Citi. The first is capital return – not the most important, but the best starting point. Capital return gives us a margin of safety here and allows us to see what the bank can engineer in terms of EPS growth via its own capital resources.
Annual Income Statement Data
Actuals in M $
Estimates in M $
Fiscal Period December
2014
2015
2016
2017
2018
2019
Sales
77 272
76 100
69 875
71 583
74 100
76 801
EBITDA
-
-
-
-
-
-
Operating profit (EBIT)
21 824
32 485
28 459
28 051
29 719
30 918
Pre-Tax Profit (EBT)
-
-
-
-
-
-
Net income
6 691
16 249
13 640
14 492
14 988
15 598
P/E ratio
24,6
9,58
12,6
14,3
12,8
11,1
EPS ( $ )
2,20
5,40
4,72
5,31
5,90
6,83
Dividend per Share ( $ )
0,04
0,16
0,42
0,96
1,46
1,82
Yield
0,07%
0,31%
0,71%
1,27%
1,92%
2,41%
Reference price ( $ )
54.11
51.75
59.43
75.71
75.71
75.71
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.