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Will Goldman (GS) Q1 Earnings Top Estimates on Cost Control?
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We expect The Goldman Sachs Group, Inc. (GS - Free Report) to beat earnings expectations when it reports first-quarter 2017 results, before the opening bell on Apr 18.
Why a Likely Positive Surprise?
Our proven model shows that Goldman has the right combination of two key ingredients to beat earnings.
Zacks ESP: The Earnings ESP for the stock, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is pegged at +1.69%. This is a very significant and leading indicator of a likely positive earnings surprise for the company. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank #3 (Hold): Note that stocks with a Zacks Ranks #1 (Strong Buy), 2 (Buy) and 3 have a significantly higher chance of beating earnings.
The combination of Goldman’s Zacks Rank #3 and ESP of +2.44% makes us confident of an earnings beat.
It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Further, the company boasts an impressive earnings surprise history as depicted in the chart below:
Goldman Sachs Group, Inc. (The) Price and EPS Surprise
Shares of Goldman gained 32.4% over the past six months compared with 23.1% growth recorded by the Zacks categorized Investment Bank industry.
Factors to Influence Q1 Results
Market Volatility: Being an investment bank, Goldman is exposed to extreme market volatility. Therefore, the company is likely to be affected by the persistent market swings being experienced since the beginning of 2017.
Top-line Growth: Trading revenues are likely to display decent improvement in the quarter, as there was uncertainty related to Trump's policy changes. Particularly, fixed-income trading activity has soared since the presidential election. Trading in equities should not be disappointing either. Apart from this, banks are likely to witness an increase in investment banking fees attributable to robust M&A activity, as well as increase in debt and equity underwriting.
Pressure on Net Interest Margin (NIM) Might Ease: Though the prolonged low-rate environment has taken a toll on the bank’s margins over the past several quarters, the Fed’s recent rate hike for the third time since the financial crisis, and its commitment to raise rates faster (two more times) this year, based on a convincing pace of economic growth, should help banks get rid of shrinking margins.
Strong Expense Management: Goldman completed an expense initiative during the first half of 2016 which translated into run-rate expense savings of around $700 million. Further, the company continued those efforts in the second half of 2016 and generated nearly $900 million of run-rate savings. Goldman is focused on improving efficiency while maintaining strong franchise and investing in new opportunities. Therefore, continuation of expense management is likely to aid bottom-line expansion in the coming quarters.
Notably, this banking giant’s performance was inadequate to win analysts’ confidence during the quarter. The Zacks Consensus Estimate remained unchanged at $5.32 over the last seven days.
Stocks That Warrant a Look
Here are some stocks you may want to consider, as according to our model, they have the right combination of elements to post an earnings beat this quarter.
The Earnings ESP for BancorpSouth, Inc. is +2.63% and it carries a Zacks Rank #3. The company is scheduled to release first-quarter results on Apr 19.
Comerica Incorporated (CMA - Free Report) has an Earnings ESP of +1.98% and a Zacks Rank #3. It is slated to report first-quarter results on Apr 18.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 "Strong Sells." Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>
See More Zacks Research for These Tickers
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Will Goldman (GS) Q1 Earnings Top Estimates on Cost Control?
We expect The Goldman Sachs Group, Inc. (GS - Free Report) to beat earnings expectations when it reports first-quarter 2017 results, before the opening bell on Apr 18.
Why a Likely Positive Surprise?
Our proven model shows that Goldman has the right combination of two key ingredients to beat earnings.
Zacks ESP: The Earnings ESP for the stock, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is pegged at +1.69%. This is a very significant and leading indicator of a likely positive earnings surprise for the company. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank #3 (Hold): Note that stocks with a Zacks Ranks #1 (Strong Buy), 2 (Buy) and 3 have a significantly higher chance of beating earnings.
The combination of Goldman’s Zacks Rank #3 and ESP of +2.44% makes us confident of an earnings beat.
It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Further, the company boasts an impressive earnings surprise history as depicted in the chart below:
Goldman Sachs Group, Inc. (The) Price and EPS Surprise
Goldman Sachs Group, Inc. (The) Price and EPS Surprise | Goldman Sachs Group, Inc. (The) Quote
Shares of Goldman gained 32.4% over the past six months compared with 23.1% growth recorded by the Zacks categorized Investment Bank industry.
Factors to Influence Q1 Results
Market Volatility: Being an investment bank, Goldman is exposed to extreme market volatility. Therefore, the company is likely to be affected by the persistent market swings being experienced since the beginning of 2017.
Top-line Growth: Trading revenues are likely to display decent improvement in the quarter, as there was uncertainty related to Trump's policy changes. Particularly, fixed-income trading activity has soared since the presidential election. Trading in equities should not be disappointing either. Apart from this, banks are likely to witness an increase in investment banking fees attributable to robust M&A activity, as well as increase in debt and equity underwriting.
Pressure on Net Interest Margin (NIM) Might Ease: Though the prolonged low-rate environment has taken a toll on the bank’s margins over the past several quarters, the Fed’s recent rate hike for the third time since the financial crisis, and its commitment to raise rates faster (two more times) this year, based on a convincing pace of economic growth, should help banks get rid of shrinking margins.
Strong Expense Management: Goldman completed an expense initiative during the first half of 2016 which translated into run-rate expense savings of around $700 million. Further, the company continued those efforts in the second half of 2016 and generated nearly $900 million of run-rate savings. Goldman is focused on improving efficiency while maintaining strong franchise and investing in new opportunities. Therefore, continuation of expense management is likely to aid bottom-line expansion in the coming quarters.
Notably, this banking giant’s performance was inadequate to win analysts’ confidence during the quarter. The Zacks Consensus Estimate remained unchanged at $5.32 over the last seven days.
Stocks That Warrant a Look
Here are some stocks you may want to consider, as according to our model, they have the right combination of elements to post an earnings beat this quarter.
BB&T Corporation has an Earnings ESP of +4.29% and a Zacks Rank #3. It is scheduled to report first-quarter 2017 results on Apr 20. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for BancorpSouth, Inc. is +2.63% and it carries a Zacks Rank #3. The company is scheduled to release first-quarter results on Apr 19.
Comerica Incorporated (CMA - Free Report) has an Earnings ESP of +1.98% and a Zacks Rank #3. It is slated to report first-quarter results on Apr 18.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 "Strong Sells." Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>