Citigroup Inc. (NYSE:C) could have a tough time beating expectations when it reports earnings on January 19. Specifically, 14 analysts surveyed by Zacks expect C to report earnings per share (EPS) of $1.06 for the fourth quarter of 2006 with a "whisper number" of $1.09. For all of 2006, analysts expect C to earn $4.26, and $4.55 for 2007, a 6.8% increase.

As I noted last year, we are in a beat-and-raise market. This means that if a company aspires to a rising stock price, it must beat analysts' EPS expectations each quarter and raise its future earnings guidance. For companies that are widely followed by analysts, it is particularly difficult to beat and raise because analysts are paid significant sums to set accurate expectations. Citigroup is widely covered, so it's hard for it to win.

C's stock price has risen 10.5% in the last year to $54 -- 5% below the all-time high it hit last month. And its $90.8 billion in revenues and $21 billion in net income have grown 19.4% and 6.4%, respectively, in the last 12 months. C trades at a price/earnings (P/E) multiple on 2007 earnings of 11.9 -- 177% of its anticipated 6.8% earnings growth -- not a good sign -- particularly considering that its EPS grew almost twice as fast -- 11.6% -- in 2006.

I'm a bit concerned about whether Citigroup will make its numbers since it announced last week that it was taking a seven cents a share charge to restructure its Japanese consumer finance operation. But analysts may have already factored that in to their expectations.

On January 18, we'll see whether C will beat-and-raise, meet-and-maintain, or miss-and-lower. What do you think will happen?

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm, a Professor of Management at Babson College, and editor of The Cohan Letter. He owns Citigroup shares.

Also check out some other earnings reports that we're following, and let us know your thoughts on earnings expectations.