We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
High Volatility & Rates to Benefit Goldman (GS) Q1 Earnings
Read MoreHide Full Article
The rebound in trading business is likely to drive Goldman Sachs’ (GS - Free Report) first-quarter earnings, to be reported on Apr 17. Moreover, benefits of higher rates and relatively better performance of other segments — mainly investing and lending — are anticipated to aid earnings.
Being an investment bank, Goldman is exposed to extreme market volatility. After three straight quarters of muted activities, it appears that volatility is back in the markets, with extremity in February and March. This indicates higher trading activities and increased trading revenues.
Notably, the quarter witnessed investors’ anxiety on uncertainty over the number of rate hikes on upbeat economic numbers and rising inflation, which pulled the benchmark 10-year Treasury bond yields down. This reversed the uptrend experienced by banks since last September. Moreover, Trump’s trade-tariff announcements on Chinese imports and a sharp sell-off in the tech sector affected the stock market rally in the quarter.
Reversing the trend of the last couple of quarters, higher trading revenues are expected in the to-be-reported quarter. The Zacks Consensus Estimate for the Institutional Client Services division, of which the major portion comprises fixed income revenues, reflects a rise of 19.2% sequentially.
In additionally, investment management unit of Goldman is projected to aid earnings as increase in investments in fixed income, alternatives and low-cost index funds are expected to escalate management and other fees. Notably, the Zacks Consensus Estimate for the division projects a rise of 12.4% year over year.
Here are the other factors that might influence Goldman’s Q1 results:
Investment Banking Fees to Report Modest Results: The trend of earning solid advisory and underwriting fees for debt and equity issuance might reverse in the first quarter, as rising rates will limit corporates’ involvement in these activities. As debt origination fees typically account for about half of total investment banking fees, this could impact revenues of Goldman.
However, a potential rise in fees from increasing M&As will likely help banks partially offset the lost revenues. Also, strong equity issuances globally might have boosted IPOs and follow-on offerings. So, the related fees are predicted to increase. Thus, Goldman is also likely to report a decent quarter.
Notably, the Zacks Consensus Estimate for investment banking segment is projected at $1.8 billion, up 12.5% year over year.
Investing & Lending to Get a Boost: Higher asset values, improved corporate performance and rising rates are expected to aid revenues from this source. In addition to higher interest rates, a moderate improvement in lending — particularly in the areas of commercial and industrial, real estate and consumer — might perk up revenues. Notably, the Zacks Consensus Estimate for investing and lending segment is projected at $1.6 billion, up 23.1% year over year.
Strong Expense Management: Goldman is focused on enhancing its efficiency while maintaining strong franchise and investing in new opportunities. As the majority of unnecessary expenses have already been cut by the bank, expense reduction will unlikely be a major support. Furthermore, there were no major outflows related to legal settlements during the quarter that might impact Goldman’s earnings unusually.
Here is what our quantitative model predicts:
Goldman does not have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: The Earnings ESP for Goldman is 0.00%.
Zacks Rank: Goldman carries a Zacks Rank #3, which increases the predictive power of ESP. But we also need to have a positive ESP to be confident of a positive earnings surprise.
The Zacks Consensus Estimate for earnings of $5.67 reflects a 10.1% rise on a year-over-year basis. Further, the Zacks Consensus Estimate for sales of $8.9 billion indicates 10.7% increase from the prior-year quarter.
The Goldman Sachs Group, Inc. Price and EPS Surprise
Here are some stocks you may want to consider, as according to our model these have the right combination of elements to post an earnings beat this quarter.
The Earnings ESP for M&T Bank (MTB - Free Report) is +0.15% and it carries a Zacks Rank of 2. The company is scheduled to report earnings on Apr 16.
BB&T Corporation has an Earnings ESP of +1.37% and carries a Zacks Rank of 3. It is set to report quarterly figures on Apr 19.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
High Volatility & Rates to Benefit Goldman (GS) Q1 Earnings
The rebound in trading business is likely to drive Goldman Sachs’ (GS - Free Report) first-quarter earnings, to be reported on Apr 17. Moreover, benefits of higher rates and relatively better performance of other segments — mainly investing and lending — are anticipated to aid earnings.
Being an investment bank, Goldman is exposed to extreme market volatility. After three straight quarters of muted activities, it appears that volatility is back in the markets, with extremity in February and March. This indicates higher trading activities and increased trading revenues.
Notably, the quarter witnessed investors’ anxiety on uncertainty over the number of rate hikes on upbeat economic numbers and rising inflation, which pulled the benchmark 10-year Treasury bond yields down. This reversed the uptrend experienced by banks since last September. Moreover, Trump’s trade-tariff announcements on Chinese imports and a sharp sell-off in the tech sector affected the stock market rally in the quarter.
Reversing the trend of the last couple of quarters, higher trading revenues are expected in the to-be-reported quarter. The Zacks Consensus Estimate for the Institutional Client Services division, of which the major portion comprises fixed income revenues, reflects a rise of 19.2% sequentially.
In additionally, investment management unit of Goldman is projected to aid earnings as increase in investments in fixed income, alternatives and low-cost index funds are expected to escalate management and other fees. Notably, the Zacks Consensus Estimate for the division projects a rise of 12.4% year over year.
Here are the other factors that might influence Goldman’s Q1 results:
Investment Banking Fees to Report Modest Results: The trend of earning solid advisory and underwriting fees for debt and equity issuance might reverse in the first quarter, as rising rates will limit corporates’ involvement in these activities. As debt origination fees typically account for about half of total investment banking fees, this could impact revenues of Goldman.
However, a potential rise in fees from increasing M&As will likely help banks partially offset the lost revenues. Also, strong equity issuances globally might have boosted IPOs and follow-on offerings. So, the related fees are predicted to increase. Thus, Goldman is also likely to report a decent quarter.
Notably, the Zacks Consensus Estimate for investment banking segment is projected at $1.8 billion, up 12.5% year over year.
Investing & Lending to Get a Boost: Higher asset values, improved corporate performance and rising rates are expected to aid revenues from this source. In addition to higher interest rates, a moderate improvement in lending — particularly in the areas of commercial and industrial, real estate and consumer — might perk up revenues. Notably, the Zacks Consensus Estimate for investing and lending segment is projected at $1.6 billion, up 23.1% year over year.
Strong Expense Management: Goldman is focused on enhancing its efficiency while maintaining strong franchise and investing in new opportunities. As the majority of unnecessary expenses have already been cut by the bank, expense reduction will unlikely be a major support. Furthermore, there were no major outflows related to legal settlements during the quarter that might impact Goldman’s earnings unusually.
Here is what our quantitative model predicts:
Goldman does not have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: The Earnings ESP for Goldman is 0.00%.
Zacks Rank: Goldman carries a Zacks Rank #3, which increases the predictive power of ESP. But we also need to have a positive ESP to be confident of a positive earnings surprise.
The Zacks Consensus Estimate for earnings of $5.67 reflects a 10.1% rise on a year-over-year basis. Further, the Zacks Consensus Estimate for sales of $8.9 billion indicates 10.7% increase from the prior-year quarter.
The Goldman Sachs Group, Inc. Price and EPS Surprise
The Goldman Sachs Group, Inc. Price and EPS Surprise | The Goldman Sachs Group, Inc. Quote
Stocks That Warrant a Look
Here are some stocks you may want to consider, as according to our model these have the right combination of elements to post an earnings beat this quarter.
U.S. Bancorp (USB - Free Report) is slated to release results on Apr 18. The company has an Earnings ESP of +0.56% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Earnings ESP for M&T Bank (MTB - Free Report) is +0.15% and it carries a Zacks Rank of 2. The company is scheduled to report earnings on Apr 16.
BB&T Corporation has an Earnings ESP of +1.37% and carries a Zacks Rank of 3. It is set to report quarterly figures on Apr 19.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>