Banking, finance, and taxes

What to Expect From Goldman Sachs Earnings

Chris Lange

Published: July 18, 2016 2:10 pm

Last Updated: January 13, 2020 5:36 am

The Goldman Sachs Group, Inc. (NYSE: GS) is scheduled to release second quarter financial results before the markets open on Tuesday. This company continues to be the gold standard of Wall Street banks and trades around a low 12-times estimated 2016 earnings.

The consensus estimates from Thomson Reuters are calling for $3.00 in earnings per share (EPS) on $7.58 billion in revenue. The same period from last year had $1.98 in EPS on $9.07 billion in revenue.

The company has announced that the Federal Reserve did not object to its 2016 capital plan. We will get more data soon, but this includes common stock repurchases, an increase to its quarterly common stock dividend, and also the possible issuance and redemption of other capital securities. As a reminder, Goldman Sachs is one of the largest weightings in the Dow Jones Industrial Average.

Goldman Sachs has a gigantic institutional equity, debt and derivatives business, an ultra high net worth clientele, top investment banking and capital markets expertise. The bank continues to be a dominant force around the world and is one of the most sought after in the world. And it is one of the very few that dictate who can be a client at the firm.

In investment banking, the company has the preeminent client franchise. Goldman Sachs advised on more than $1.5 trillion of announced mergers and acquisitions transactions last year, the highest level the bank has ever recorded. It also has maintained a leading market share over the past 25 years. It maintained a market position when merger and acquisition 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.

A few analysts weighed in on Goldman Sachs prior to the release of the earnings report:

• Berenberg Bank initiated coverage with a Hold rating and a $140 price target.
• Credit Suisse has a Buy rating.
• Wells Fargo reiterated a Hold rating.
• Barclays reiterated an Equal Weight rating with a $210 price target.
• Oppenheimer reiterated an Outperform rating with a $214 price target.
• Citigroup reiterated a Buy rating.
• Deutsche Bank reiterated a Hold rating.

So far in 2016, Goldman Sachs has underperformed the broad markets with the stock down nearly 10% in this time. Over the past 52-weeks the stock is down about 22%.

Shares of Goldman Sachs were last trading up about 1% at $163.15, with a consensus analyst price target of $177.57 and a 52-week trading range of $138.20 to $214.61.