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Is a Beat in the Offing for Goldman's (GS) Q3 Earnings?
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The Goldman Sachs Group, Inc. (GS - Free Report) is slated to release third-quarter 2022 earnings on Oct 18, before market open. The company is expected to have witnessed year-over-year declines in revenues and earnings.
In the previous quarter, Goldman’s earnings surpassed the Zacks Consensus Estimate. While strength in Fixed Income, Currency and Commodities (“FICC”), wealth management, and consumer banking businesses acted as a tailwind, the company’s results were hurt by lower debt and equity underwriting revenues.
Over the trailing four quarters, the company’s earnings surpassed the consensus estimate on three of the four occasions and missed on the other, the surprise being 19.4%, on average.
The Goldman Sachs Group, Inc. Price and EPS Surprise
Global Market Revenues: The macroeconomic concerns and geopolitical tensions have led to uncertainty. Also, fears of an economic slowdown, high inflation and rising interest rates globally led to increased client activity and trading volume in the third quarter. Thus, FICC and equity trading are likely to have been decent in the third quarter.
However, the Zacks Consensus Estimate of $5.18 billion for GS’s net revenues in the Global Markets segment suggests a 7.6% decline from the prior-year quarter’s reported number.
Investment Banking (IB) Fees: After an extraordinary performance for almost two years, global deal-making shrank for the third consecutive quarter. Raging inflation, the equity markets’ rout and fears of a recession dealt a blow to business sentiments and plans for expansion via acquisitions. Thus, deal volume and total value numbers crashed in the third quarter.
With companies veering away from debt and equity issuances, revenues from underwriting and advisory businesses are expected to have remained subdued in the quarter.
While Goldman’s leading position in announced and completed mergers and acquisitions is expected to have offered some support, low equity and bond volumes are anticipated to have been headwinds. The consensus estimate for IB fees of $1.96 billion indicates a 47% year-over-year decline.Our estimate for IB income is $2.39 billion, indicating a decline of 32.6%.
Net Interest Income (NII): While lending activity improved sequentially in the third quarter, the pace of loan growth across most categories slowed as the quarter progressed. Per the Fed’s latest data, commercial and industrial loans, real estate loans, and consumer loans slightly moderated in July and August from the second quarter. Encouragingly, commercial real estate loan growth accelerated in the third quarter. Hence, the company’s loan balances are likely to have improved in the third quarter.
The positive impacts of the Fed hiking interest rates by 150 basis points, resulting in a policy rate of 3.0-3.25%, are likely to get reflected in the company NII in the third quarter.
Asset Management Business: Goldman’s asset management business is likely to see the benefits of past inorganic growth moves. However, amid the macroeconomic uncertainty and geopolitical fears, along with market declines and unfavorable credit spreads, Goldman’s asset management business is expected to have witnessed outflows in the quarter. Amid the market pullback, the consensus estimate for the company’s asset management revenues of $1.85 billion suggests an 18.4% decline from the prior-year quarter’s reported figure.
Expenses: Goldman’s investments in technology are anticipated to have led to a rise in costs in the to-be-reported quarter. Also, a rise in transaction-based expenses due to higher client activity and inflationary pressure across most expense lines is expected to have dragged earnings.
Here is what our quantitative model predicts:
Our proven model shows that Goldman has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat this time around.
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 +2.00%.
Prior to the third-quarter earnings release, Goldman’s quarterly activities were inadequate to gain adequate analyst confidence. Notably, the Zacks Consensus Estimate for third-quarter earnings has been revised 5.6% downward to $7.46 over the past week. It suggests a 50% year-over-year fall.Our estimate for earnings is $8.24 per share.
Also, the consensus estimate of $11.18 billion for quarterly revenues indicates a 17.9% fall from the prior-year quarter’s reported number.Our estimate for revenues is $11.13 billion.
Other Stocks That Warrant a Look
BankUnited (BKU - Free Report) and Associated Banc-Corp (ASB - Free Report) are a few other stocks that you might also want to consider, as these too have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
The Earnings ESP for BKU is +1.32% and the company carries a Zacks Rank #3 at present. BKU is slated to report third-quarter 2022 results on Oct 20.
Associated Banc-Corp is scheduled to release third-quarter 2022 earnings on Oct 20. The company, with a Zacks Rank #2 (Buy) at present, has an Earnings ESP of +2.39%.
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Is a Beat in the Offing for Goldman's (GS) Q3 Earnings?
The Goldman Sachs Group, Inc. (GS - Free Report) is slated to release third-quarter 2022 earnings on Oct 18, before market open. The company is expected to have witnessed year-over-year declines in revenues and earnings.
In the previous quarter, Goldman’s earnings surpassed the Zacks Consensus Estimate. While strength in Fixed Income, Currency and Commodities (“FICC”), wealth management, and consumer banking businesses acted as a tailwind, the company’s results were hurt by lower debt and equity underwriting revenues.
Over the trailing four quarters, the company’s earnings surpassed the consensus estimate on three of the four occasions and missed on the other, the surprise being 19.4%, on average.
The Goldman Sachs Group, Inc. Price and EPS Surprise
The Goldman Sachs Group, Inc. price-eps-surprise | The Goldman Sachs Group, Inc. Quote
Factors at Play
Global Market Revenues: The macroeconomic concerns and geopolitical tensions have led to uncertainty. Also, fears of an economic slowdown, high inflation and rising interest rates globally led to increased client activity and trading volume in the third quarter. Thus, FICC and equity trading are likely to have been decent in the third quarter.
However, the Zacks Consensus Estimate of $5.18 billion for GS’s net revenues in the Global Markets segment suggests a 7.6% decline from the prior-year quarter’s reported number.
Investment Banking (IB) Fees: After an extraordinary performance for almost two years, global deal-making shrank for the third consecutive quarter. Raging inflation, the equity markets’ rout and fears of a recession dealt a blow to business sentiments and plans for expansion via acquisitions. Thus, deal volume and total value numbers crashed in the third quarter.
With companies veering away from debt and equity issuances, revenues from underwriting and advisory businesses are expected to have remained subdued in the quarter.
While Goldman’s leading position in announced and completed mergers and acquisitions is expected to have offered some support, low equity and bond volumes are anticipated to have been headwinds. The consensus estimate for IB fees of $1.96 billion indicates a 47% year-over-year decline.Our estimate for IB income is $2.39 billion, indicating a decline of 32.6%.
Net Interest Income (NII): While lending activity improved sequentially in the third quarter, the pace of loan growth across most categories slowed as the quarter progressed. Per the Fed’s latest data, commercial and industrial loans, real estate loans, and consumer loans slightly moderated in July and August from the second quarter. Encouragingly, commercial real estate loan growth accelerated in the third quarter. Hence, the company’s loan balances are likely to have improved in the third quarter.
The positive impacts of the Fed hiking interest rates by 150 basis points, resulting in a policy rate of 3.0-3.25%, are likely to get reflected in the company NII in the third quarter.
Asset Management Business: Goldman’s asset management business is likely to see the benefits of past inorganic growth moves. However, amid the macroeconomic uncertainty and geopolitical fears, along with market declines and unfavorable credit spreads, Goldman’s asset management business is expected to have witnessed outflows in the quarter. Amid the market pullback, the consensus estimate for the company’s asset management revenues of $1.85 billion suggests an 18.4% decline from the prior-year quarter’s reported figure.
Expenses: Goldman’s investments in technology are anticipated to have led to a rise in costs in the to-be-reported quarter. Also, a rise in transaction-based expenses due to higher client activity and inflationary pressure across most expense lines is expected to have dragged earnings.
Here is what our quantitative model predicts:
Our proven model shows that Goldman has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat this time around.
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 +2.00%.
Zacks Rank: It currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Prior to the third-quarter earnings release, Goldman’s quarterly activities were inadequate to gain adequate analyst confidence. Notably, the Zacks Consensus Estimate for third-quarter earnings has been revised 5.6% downward to $7.46 over the past week. It suggests a 50% year-over-year fall.Our estimate for earnings is $8.24 per share.
Also, the consensus estimate of $11.18 billion for quarterly revenues indicates a 17.9% fall from the prior-year quarter’s reported number.Our estimate for revenues is $11.13 billion.
Other Stocks That Warrant a Look
BankUnited (BKU - Free Report) and Associated Banc-Corp (ASB - Free Report) are a few other stocks that you might also want to consider, as these too have the right combination of elements to post an earnings beat in their upcoming releases, per our model.
The Earnings ESP for BKU is +1.32% and the company carries a Zacks Rank #3 at present. BKU is slated to report third-quarter 2022 results on Oct 20.
Associated Banc-Corp is scheduled to release third-quarter 2022 earnings on Oct 20. The company, with a Zacks Rank #2 (Buy) at present, has an Earnings ESP of +2.39%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.