First-quarter 2015 EPS totaled $5.94, an upside surprise of nearly 40%. Goldman’s stock was the second best performer in the quarter, with a gain of just over 11%. Much depends on the performance of Goldman’s fixed income group, where revenues may drop as much as 15%. On the plus side, mergers and acquisitions fees should improve, and the bank’s investing and lending revenues are expected to rise. The forward price-to-earnings (P/E) ratio is 10.69, and the price-to-book ratio is 1.26.
This company hits on all the right cylinders in the financial sector. Goldman Sachs has a gigantic institutional equity desk, a solid debt and derivatives business, an ultra-high net worth clientele, top investment banking and capital markets expertise. The firm continues to be a dominant force around the world, and it is one of the very few firms that dictates who can be a client at the firm.
In investment banking, the company has the preeminent client franchise. Goldman Sachs advised on more than $1 trillion of announced transactions last year, the highest level since 2007. It also has maintained a leading market share over the past 25 years. It maintained a market position when M&A activity was dominated by technology in 1999, by financials in 2008 and by natural resources in 2014. The bottom line is, regardless of where market strength is in any given year, Goldman Sachs is up to the task.
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A few analysts weighed in on Goldman Sachs ahead of its earnings report:
- Citigroup reiterated a Hold rating and raised the price target to $210 from $190.
- Susquehanna reiterated a Neutral rating with a $221 price target.
- JPMorgan raised its price target to $169 from $168.
Shares of Goldman Sachs were up 0.3% at $212.84 on Wednesday afternoon. The stock has a consensus analyst price target of $214.17 and a 52-week trading range of $168.02 to $218.77.
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