Breaking News

Muted Trading Activities To Hurt Goldman's (GS) Q3 Earnings

By Zacks Investment ResearchOct 11, 2019 08:37AM ET
Muted Trading Activities To Hurt Goldman's (GS) Q3 Earnings
By Zacks Investment Research   |  Oct 11, 2019 08:37AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

Muted trading business is unlikely to have supported Goldman Sachs’ (NYSE:GS) third-quarter 2019 earnings, slated for release on Oct 15. On the trading front, performance of capital markets might be a matter of concern. Despite strong equity markets and elevated volumes, reduced client activity were witnessed in the to-be-reported quarter, partly on the political uncertainty and continued ambiguity over trade conflict, along with several other geopolitical matters.

However, Goldman’s investment management unit is projected to have supported earnings in the quarter. Prior investments in fixed income, alternatives and low-cost index funds may keep reaping benefits to some extent.

Here are the other factors that might influence Goldman’s Q3 results:

Investment Banking Fees to Disappoint: Despite decent equity market performance, equity issuance is likely to have been weak globally. Yet, lower rates might aid debt issuances to some extent in the third quarter. Hence, Goldman’s equity underwriting fees and debt origination fees (accounting for almost 55% of total investment banking fees) will likely be affected, while its commendable position in the market may offer some respite.

Further, the U.S.-China trade war concerns have led to a decline in global economic growth, affecting deal volume. Moreover, marginal increase in consumer spending and subdued business investments amid trade tensions hit the M&A and IPO activities. So, Goldman’s advisory fees will be adversely impacted.

Investing & Lending to Get a Boost: Improved corporate performance is expected to have drive revenues from this source. A decent lending backdrop, particularly in the areas of consumer will offer support to interest income, while weakness in revolving home equity loans, commercial and industrial, along with commercial real estate, will partially offset this. In addition, higher asset values recorded during the quarter might have complemented this growth.

Strong Expense Management: Goldman is focused on enhancing its efficiency, while maintaining a strong franchise and investing in new opportunities. As the majority of unnecessary expenses have already been slashed by the bank, expense reduction will unlikely be a major support. Additionally, there were no major outflows related to legal settlements during the September-end quarter that might impact Goldman’s earnings unusually.

Here is what our quantitative model predicts:

Goldman does not have the right combination of the two key ingredients — a positive Earnings ESP and 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.

Earnings ESP: The Earnings ESP for Goldman is -2.47%.

Zacks Rank: Goldman currently carries a Zacks Rank of 3, which increases the predictive power of ESP. But we need to have positive earnings ESP to be sure of an earnings beat.

The Zacks Consensus Estimate for earnings of $5.03 reflects a 19.9% decline on a year-over-year basis. Further, the Zacks Consensus Estimate for sales of $8.6 billion indicates 1.1% decrease from the prior-year quarter.

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.

Citigroup (NYSE:C) is slated to release results on Oct 15. The company has an Earnings ESP of +0.51% and currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

M&T Bank Corporation (NYSE:MTB) is scheduled to report earnings figures on Oct 17. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +0.72%.

The Earnings ESP for Wells Fargo (NYSE:WFC) & Company (NYSE:C) is +5.79% and it carries a Zacks Rank of 3, currently. The company is set to report quarterly numbers on Oct 15.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>

Citigroup Inc. (C): Free Stock Analysis Report

Wells Fargo & Company (WFC): Free Stock Analysis Report

M&T Bank Corporation (MTB): Free Stock Analysis Report

The Goldman Sachs Group, Inc. (GS): Free Stock Analysis Report

Original post

Zacks Investment Research
Muted Trading Activities To Hurt Goldman's (GS) Q3 Earnings
Muted Trading Activities To Hurt Goldman's (GS) Q3 Earnings

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email