Goldman Sachs Stock To Report Mixed Results In Q4?

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Goldman Sachs (NYSE: GS) It is scheduled to report its fiscal Q4 2021 results on Tuesday, January 18, 2022. We expect Goldman Sachs to report mixed results, with revenues exceeding consensus estimates and earnings missing from expected figures. The investment bank reported better than expected results last quarter, with top-line growth of 26% year over year. This was driven by significant growth in the investment banking business, higher global markets and consumer and wealth management revenues. Investment banking grew as mergers and acquisitions (M&A) and equity underwriting deal volumes increased, with global markets benefiting from higher equity trading revenues. Similarly, the Consumer and Wealth Management segment benefited from an increase in outstanding loan balances. That said, the top-line was partially offset by negative growth in the asset management division, primarily due to lower equity investment revenue. We expect the same trend to continue in the fourth quarter.

we guess Goldman Sachs Valuation About $447 per share which is 14% higher than the current market price. Our interactive dashboard analysis Goldman Sachs earnings preview There is more detail.

(1) Revenue expected to outperform consensus estimates

Goldman Sachs Revenue grew 22% annually to $44.6 billion in 2020. This was primarily driven by 24% year-over-year growth in investment banking and a 43% jump in the sales and trading businesses, partially offset by an 11% decline in asset management revenue.

  • The bank is a global leader in the investment banking sector. In addition, investment banking together with the sales and trading businesses generated approximately 69% of total revenue in 2020. Growth momentum in investment banking continued in the first three quarters of 2021, with cumulative revenue growing 63% year over year to $11.1 billion. Thanks for the jump in M&A and initial public offering activity. While the sales and trading segment grew 7% year over year to $18.1 billion in the same period, this was primarily due to higher equity trading revenue. We expect fourth quarter results to be on the same lines.
  • Asset management was the only segment which registered negative growth in 2020. This was primarily due to lower revenues in the equity investment sub-category. That said, the segment has seen a significant jump in revenue in the first three quarters. Notably, cumulative nine-month revenue grew 152% year over year to $12 billion, primarily driven by higher earnings from equity investments. We expect the same trend to continue in the fourth quarter.
  • Overall, we expect Goldman Sachs revenue to reach $59.2 billion for the full year 2021.

Trefis estimates Goldman Sachs’ fiscal Q4 2021 revenue of about $1.54 billion, up 4% from the consensus estimate of $12.01 billion. We expect the investment banking and asset management business to drive fourth quarter results.

Going forward, we expect capital market trading volumes and trading volumes to normalize as the economy improves. This will have a negative impact on the top-line of the company. However, the wealth and asset management divisions are likely to maintain their growth trajectory. Our Dashboard is on Goldman Sachs Revenue Provides more details on the company’s operating segment along with our forecast for FY2022.

(2) EPS likely to miss consensus estimates

Goldman Sachs Q4 2021 adjusted earnings per share is expected to be $10.81 per Trefis analysis, which is about 8% lower than the consensus estimate of $11.73. The bank had a strong 2020 performance, with its adjusted net income rising 13% yoy to $8.9 billion. Moreover, the same momentum continued in the first three quarters of 2021. Notably, cumulative nine-month adjusted net income nearly tripled on a year-over-year basis to $17.3 billion. This was partly due to higher revenue and partly due to a significant improvement in operating margin. We expect fourth quarter results to follow the same trend. Overall, Goldman Sachs is likely to report annual EPS of $59.37 for full year 2021

(3) The stock price is estimated to be 14% higher than the current market price

we get here Goldman Sachs Valuation, using an EPS estimate of approximately $59.37 in fiscal year 2021 and a P/E multiplier of above 7x. This translates into a price of $447, which is 14% higher than the current market price of around $390.

Note: P/E multipliers are based on year-end share price and reported (or expected) adjusted earnings for the full year

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