Earnings Preview : Goldman Sachs (GS), Q1, 2010
Wednesday, April 07, 2022 10:26 AM

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(By Tim) Investment Banker, Goldman Sachs (NYSE: GS) will release the company's earnings report for the 1st quarter of 2010 on April 20 at 8:00 AM EST. A conference call to discuss the results will be held a 11:00 AM.

Goldman Sachs is a global investment banking and securities firm, providing a full range of investing, advisory and financing services worldwide to a substantial and diversified client base, which includes corporations, financial institutions, governments, and high net worth individuals. (Company Press Release)

The consensus quarterly earnings estimate for Goldman Sachs is $4.02 per share on a average revenue estimate of $11.16 billion. The estimates from the 22 Wall Street analysts following the company range from a low of $3.33 up to a high of $4.57. Actual per share earnings for the 1st quarter of 2009 were $3.39 on $9.43 billion of revenues.

Goldman has been tearing up the estimates of Wall Street's finest over the last four quarters. Earnings were not fazed by the financial crisis and the $3.33 from a year ago was over double the before earnings estimate of $1.64 per share. GS ratcheted up the earnings for the rest of the year, earning $4.93, $5.25 and $8.20 per share in the 2nd, 3rd and 4th quarters, respectively. All of these results were well above the forecasts.

Goldman Sachs tends to be a polarizing company among investors, politicians and reporters. The company has taken a lot of criticism for its participation in the collateralized debt obligation (CDO) market blowup that triggered the global financial crisis. On the other hand, Goldman itself did not accrue much negative financial impact from the financial crisis and even seemed to have foreseen the problems and set itself up for additional profits.

GS stock hit a post crash high of $192 back in mid-October then declined to under $150 at the end of January. The shares have recovered about half of the drop off since. During that time the earnings per share consensus estimate has eroded from about $4.50 per share down to the current estimate of $4.02. The question is whether business is truly slowing for Goldman or is the negative publicity have a psychological effect on the analysts?

For all of 2010 the projected EPS for Goldman is $18.17 compared to $22.13 per share earnings in 2009. At $170 per share the stock is trading at less that 10 times the 2010 estimate and less than eight times last years earnings. If the earnings surprise to the upside and it looks like GS will earn $20 or better this year, it will be a very positive sign for the stock price.

On the flip side, if the analysts are correct in predicting a slow down in earnings for the company, the added weight of the current negative publicity could send shareholders to the exits. For Goldman Sachs, a significant variation of the actual earnings from the consensus is a distinct possibility and the high profile of the company and its business practices would cause the miss to have a oversize effect on the share price.

 

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