Back to top

Analyst Blog

On Aug 30, 2013, we maintained our long-term recommendation on The Goldman Sachs Group, Inc. (GS - Analyst Report) at Neutral based on its well-managed global franchise, strong capital base and recent investments. However, regulatory issues coupled with fundamental pressures on the banking sector might act as deterrents to the company’s fundamentals.

Why Neutral?

Goldman reported its second-quarter 2013 earnings per share of $3.70, significantly surpassing the Zacks Consensus Estimate of $2.81. Moreover, reported earnings outpaced the prior-year quarter earnings of $1.78 per share.

Amid challenging global markets, better-than-expected results were driven by Goldman’s record revenues with an elevation in client activity. Moreover, the company’s strong capital position was a positive. However, increased operating expenses reflect undisciplined expense management.

As a significant capital market player, Goldman could benefit from the material growth of the global markets. This was reflected in the second-quarter 2013 results, which improved primarily due to buoyancy in the capital markets. Management’s preference for organic growth over acquisitions will be beneficial with respect to cost and execution risk, over the long term.

However, Goldman’s investment banking revenues reflected an operating environment generally characterized by continued macroeconomic concerns in second-quarter 2013, although there were positive developments in the U.S. economy. If macroeconomic concerns continue and result in lower levels of client activity, investment banking revenues of the bank are likely to be adversely affected.

For Goldman, the Zacks Consensus Estimate for 2013 jumped 8.1% to $15.53 per share, over the last 60 days. For 2014, the Zacks Consensus Estimate advanced 4.2% to $15.62, over the same time frame. Hence, Goldman carries a Zacks Rank #2 (Buy).

Other Major Banks to Consider

Some other major banks that are worth considering include BankUnited, Inc. (BKU - Analyst Report) with a Zacks Rank #1 (Strong Buy), while Wells Fargo & Company (WFC - Analyst Report) and The PNC Financial Services Group, Inc. (PNC - Analyst Report), carry a Zacks Rank #2 (Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
SUPER MICRO… SMCI 27.00 +10.25%
CANADIAN SO… CSIQ 38.34 +8.18%
CENTURY ALU… CENX 26.97 +7.97%
WILLDAN GRO… WLDN 11.38 +5.86%
AROTECH COR… ARTX 3.78 +5.59%