Goldman Sachs' upcoming blowout earnings
Posted
Oct 14 2009, 01:10 PM
by
Louis Navellier
Rating:
Banking giant Goldman Sachs (GS) is set to report earnings on Thursday and I, for one, am expecting an impressive blow-out.
As a behemoth on Wall Street, GS has managed to stay successful in both good times and bad. Shares are up nearly 100% over the past five years, while the Dow Jones Financial Services index fell 11% in the same time period. The future is bright for Goldman as well, with a five-year expected growth rate of 12.5%.
Presently, Goldman Sachs is close to a 52-week high and closing in on the $200 per share mark. Over the past 30 days, more than half of covering analysts raised their third-quarter profit forecasts. Last quarter, the company beat expectations by $1.41.
The thing is, with a company like Goldman Sachs, it’s nearly impossible to give an accurate earnings forecast. The bank makes so much money from so many different sources, it’s like trying to herd cats.
Just look at recent results: In July, Goldman topped Wall Street’s forecast by nearly 40%, and in April the company more than doubled Wall Street’s consensus.
Another report like that would create a frenzy among traders and would send the shares well over $200.
The current consensus on Wall Street is for Goldman to report earnings of $4.81 a share, which represents growth of 130% over the same quarter last year.
Bear in mind that when Goldman converted to being a bank last year, the company changed its fiscal year to end in December. As a result, the fourth quarter of last year was actually a fourth-month quarter -- actually a third instead of a quarter, which may account for some of the astronomical growth.
The bottom line is that Goldman is a money machine. You can see why the press likes to call it Goldmine $acks. I should add that I’m very pleased that Goldman has paid all of its TARP money to the U.S. Treasury. It’s good to have the government off its back.
I rate Goldman a B, making it a solid buy.
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