Citigroup earnings: Prince performs

Bloomberg News reports that Citigroup, Inc. (NYSE: C) posted an impressive performance in the second quarter. Citigroup's second-quarter earnings increased 18%, topping analysts' estimates of $1.14 by 10 cents, on record revenue from investment banking and international markets. Moreover, revenues -- up 20% to $26.6 billion -- grew faster than expenses -- up 16%. This suggests that Citigroup is doing better at controlling expenses.

As a Citigroup shareholder I have been frustrated with its myriad problems. While I've advocated breaking up the company to enable its parts to compete, I have also gone against James Cramer in calling the stock relatively cheap on a Price/Earnings to Growth (PEG) basis. This got me into trouble during a CNBC interview earlier this year.

Today's report, however, certainly is a win for CEO Chuck Prince. What's interesting is that Markets & Banking coupled with international markets offset the weak global consumer unit. In numbers, Markets & Banking posted revenues and profits of $8.9 billion and $2.8 billion up 33% and 64% respectively. International markets posted a growth of 34% and 35% to $12.6 billion and $3.04 billion in revenues and profits respectively. Global consumer unit revenues rose 8% to $13.7 billion, while profits tumbled 15% to $2.7 billion.

Should you buy Citigroup? On a PEG of 0.93 -- based on a P/E of 12.4 and earnings growth of 13.3% to $5.08 in 2008 -- I'd say it still looks like a buy.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns Citigroup shares.