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Goldman (GS) Outshines QTD: Will the Rally Continue in 2H20?
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Shares of Goldman Sachs (GS - Free Report) have appreciated 41.1%, quarter to date, outperforming the S&P 500 (up 24.5%) as well as the Zacks Investment Bank industry’s growth of 35%.
This impressive price performance is backed by the anticipated rebound in U.S. economy in the second half of this year on positive economic data, along with likely support from fee income on improvement in trading and investment banking performance.
Resilient global equity markets and positive economic data signal that the worst scenario of the economic downturn is soon to be over. Despite the U.S.-China tensions, civil disorder and fears of a second wave of coronavirus infections to hit the nation soon, the steady reopening of states and cities, along with anticipations of an economic recovery has been keeping investors’ hopes high.
With the Federal Reserve likely to keep interest rates near-zero this year, banks are anticipated to benefit from rise in demand for loans in the upcoming period. Moreover, fundamentally, solid prospects, driven by revenue growth, expense management, steady capital-deployment activities and technology advancement seem to be the reasons for this stellar performance.
Factors in Detail
The key source of Goldman’s earnings stability is its business diversification. Notably, the bank has been undertaking initiatives to boost the GS Bank’s business, with its acquisition of the online deposit platform of GE Capital Bank in April 2016. It also rolled out a digital consumer lending platform — Marcus by Goldman Sachs. Additionally, the company is likely to benefit from its exposure to the fast-growing exchange-traded funds (ETF) market.
In addition, Goldman’s solid global position and completed M&As will likely lend it a further edge over peers. Moreover, the bank benefited from its prudent expense-reduction initiatives over the past few years. Remarkably, the company completed an expense initiative and generated nearly $900 million of run-rate savings. The company is focused on improving efficiency while maintaining strong franchise and investing in new opportunities.
Driven by a solid capital position, Goldman remains committed toward enhancing shareholders’ value on steady capital-deployment activities. The company’s approved 2019 capital plan includes up to $7 billion in repurchases and $1.8 billion in total common stock dividends beginning third-quarter 2019 through second-quarter 2020. Following the approval, the bank increased its quarterly dividend to $1.25 in July 2019. Notably, the company has temporarily suspended share buybacks through the second quarter of 2020, following the “unprecedented challenge” from the coronavirus pandemic.
Amid the coronavirus crisis and its impact on economy, Goldman holds a total debt level of $545.9 billion as of Mar 31, 2020, which has been volatile for the past few quarters. Further, its debt-capital ratio, currently 0.71, below the industry’s average of 0.74, has remained stable. Therefore, the company’s earnings stability and strong cash position indicate a lower credit risk and a lesser likelihood of default of interest and debt repayments if the economic situation worsens.
Apart from this, Goldman is part of the industry, which currently carries a Zacks Industry Rank #83 (top 33%).
Additionally, estimates for this Zacks Rank #3 (Hold) company has been witnessing upward revisions, of late. Over the last 30 days, the Zacks Consensus Estimate for 2020 earnings moved north.
Goldman’s earnings jumped 7.81% annually over the last three to five years. The earnings growth momentum is anticipated to continue in the near term as well. Also, the company recorded an average positive earnings surprise of 4.54%, over the trailing four quarters.
Stocks to Consider
Tradeweb Markets Inc (TW - Free Report) has witnessed upward earnings estimate revisions for 2020 over the past 60 days. Moreover, this Zacks #1 Ranked (Strong Buy) stock has gained 43.9% over the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
GAIN Capital Holdings, Inc.’s current-year earnings estimate moved north in 60 days’ time. Further, the company’s shares have surged 40.6% over the past six months. At present, it holds a Zacks Rank of 2 (Buy).
Mackinac Financial Corporation has witnessed recorded upward earnings estimate revision for the ongoing year in the past 60 days. This Zacks #2 Ranked stock has depreciated 31.1% over the past six months.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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Goldman (GS) Outshines QTD: Will the Rally Continue in 2H20?
Shares of Goldman Sachs (GS - Free Report) have appreciated 41.1%, quarter to date, outperforming the S&P 500 (up 24.5%) as well as the Zacks Investment Bank industry’s growth of 35%.
This impressive price performance is backed by the anticipated rebound in U.S. economy in the second half of this year on positive economic data, along with likely support from fee income on improvement in trading and investment banking performance.
Resilient global equity markets and positive economic data signal that the worst scenario of the economic downturn is soon to be over. Despite the U.S.-China tensions, civil disorder and fears of a second wave of coronavirus infections to hit the nation soon, the steady reopening of states and cities, along with anticipations of an economic recovery has been keeping investors’ hopes high.
With the Federal Reserve likely to keep interest rates near-zero this year, banks are anticipated to benefit from rise in demand for loans in the upcoming period. Moreover, fundamentally, solid prospects, driven by revenue growth, expense management, steady capital-deployment activities and technology advancement seem to be the reasons for this stellar performance.
Factors in Detail
The key source of Goldman’s earnings stability is its business diversification. Notably, the bank has been undertaking initiatives to boost the GS Bank’s business, with its acquisition of the online deposit platform of GE Capital Bank in April 2016. It also rolled out a digital consumer lending platform — Marcus by Goldman Sachs. Additionally, the company is likely to benefit from its exposure to the fast-growing exchange-traded funds (ETF) market.
In addition, Goldman’s solid global position and completed M&As will likely lend it a further edge over peers. Moreover, the bank benefited from its prudent expense-reduction initiatives over the past few years. Remarkably, the company completed an expense initiative and generated nearly $900 million of run-rate savings. The company is focused on improving efficiency while maintaining strong franchise and investing in new opportunities.
Driven by a solid capital position, Goldman remains committed toward enhancing shareholders’ value on steady capital-deployment activities. The company’s approved 2019 capital plan includes up to $7 billion in repurchases and $1.8 billion in total common stock dividends beginning third-quarter 2019 through second-quarter 2020. Following the approval, the bank increased its quarterly dividend to $1.25 in July 2019. Notably, the company has temporarily suspended share buybacks through the second quarter of 2020, following the “unprecedented challenge” from the coronavirus pandemic.
Amid the coronavirus crisis and its impact on economy, Goldman holds a total debt level of $545.9 billion as of Mar 31, 2020, which has been volatile for the past few quarters. Further, its debt-capital ratio, currently 0.71, below the industry’s average of 0.74, has remained stable. Therefore, the company’s earnings stability and strong cash position indicate a lower credit risk and a lesser likelihood of default of interest and debt repayments if the economic situation worsens.
Apart from this, Goldman is part of the industry, which currently carries a Zacks Industry Rank #83 (top 33%).
Additionally, estimates for this Zacks Rank #3 (Hold) company has been witnessing upward revisions, of late. Over the last 30 days, the Zacks Consensus Estimate for 2020 earnings moved north.
Goldman’s earnings jumped 7.81% annually over the last three to five years. The earnings growth momentum is anticipated to continue in the near term as well. Also, the company recorded an average positive earnings surprise of 4.54%, over the trailing four quarters.
Stocks to Consider
Tradeweb Markets Inc (TW - Free Report) has witnessed upward earnings estimate revisions for 2020 over the past 60 days. Moreover, this Zacks #1 Ranked (Strong Buy) stock has gained 43.9% over the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
GAIN Capital Holdings, Inc.’s current-year earnings estimate moved north in 60 days’ time. Further, the company’s shares have surged 40.6% over the past six months. At present, it holds a Zacks Rank of 2 (Buy).
Mackinac Financial Corporation has witnessed recorded upward earnings estimate revision for the ongoing year in the past 60 days. This Zacks #2 Ranked stock has depreciated 31.1% over the past six months.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>