We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Do We Advise Adding Goldman (GS) to Your Portfolio Now?
Read MoreHide Full Article
The Goldman Sachs Group, Inc. (GS - Free Report) can be a solid bet now on the back of its leading global position in completed mergers and acquisitions in 2016. The company’s strong client activity amid volatile markets is expected to yield positive results for the stock.
Further, the impending interest rate hike is anticipated to bring stability to the top line. This, in turn, is likely to attract long-term investors. Regulatory probes and litigation issues have been escalating legal costs for Goldman. However, sharper focus on reducing expenses by reorganizing business and improving revenues is boosting the bottom line and making the growth path smoother.
Therefore, at present, it’s a good idea to add stocks with robust fundamentals and long-term growth opportunities to your portfolio.
With $862 billion in assets as of Dec 31, 2016, Goldman’s strengths include effective cost management, business diversification and steady capital deployment activities.
8 Reasons Why Goldman's Golden
Revenue Growth: Goldman continues to make steady progress toward improving its top line. The company’s projected sales growth (F1/F0) of 6.53% (as against the S&P 500 average of about 4.24%) indicates constant upward momentum in revenues.
Earnings Per Share Strength: Earnings are anticipated to display an upswing in the near term, as the company’s projected EPS growth (F1/F0) is 18.34% compared to the industry average rate of 11.83%. Also, Goldman recorded an average positive earnings surprise of 15.25%, over the trailing four quarters.
Prudent Expense Management: Goldman has been benefiting from its successful expense-reduction initiatives for the past few years. Though expenses witnessed a volatile trend over the past few years, it declined significantly in 2016. Notably, the company carried out an expense initiative during the first half of 2016, which translated into run rate expense savings of around $700 million. It continued this initiative in the second half of 2016 as well, and generated nearly $900 million of run rate savings.
Diversification: While overall revenues have been affected by unfavorable market conditions in the last few quarters, Goldman remains well positioned for growth backed by its strong investment banking operations and solid client franchise. In traditional banking, a diversified product portfolio has higher chances of sustaining growth than many other banks.
Notably, Goldman has been undertaking initiatives to boost the GS Bank’s business by acquiring the online deposit platform of GE Capital Bank in Apr 2016. Recently, it also launched a digital consumer lending platform – Marcus by Goldman Sachs. Additionally, the company is likely to benefit from its exposure to the fast growing exchange-traded funds (ETF) market.
Favorable Zacks Rank: Goldman currently carries a Zacks Rank #2 (Buy). This has been driven by upward estimate revisions for the last 60 days. For 2017, the Zacks Consensus Estimate moved up around 2.9% to $19.28 and 4.4% to $21.95 for 2018.
Steady Capital Deployment: Goldman remains focused on managing capital levels efficiently. This is well evident from the approval of the 2016 Capital Plan. This plan includes hike in dividend and repurchase of common stock. Such capital deployment activities are anticipated to boost investors’ confidence.
Stock is Undervalued: Goldman has a P/E ratio of 13.07x, compared to the industry average of 17.52x. In addition, the company has a P/B ratio of 1.33x, compared to the industry average of 1.55x. Based on these ratios, the stock seems undervalued.
Share Price Movement: Goldman’s shares gained 48.9% over the last six months, compared with 40.4% growth in the Zacks categorized Investment Bank industry.
Bottom Line
Organic growth, expense management, robust capital position and steady capital deployment activities continue to support Goldman’s growth prospects. Furthermore, business diversification remains a key strength for earnings stability.
U.S. Bancorp (USB - Free Report) has been witnessing upward estimate revisions for the last 60 days. Also, the company’s shares have risen nearly 26.7% over the last six months. It presently holds a Zacks Rank #2.
Enterprise Financial Services Corp (EFSC - Free Report) has been witnessing upward estimate revisions for the last 60 days. Over the last six months, the company’s share price has been up more than 41%. It carries a Zacks Rank #2.
8 Stocks with Huge Profit Potential
Just released: Driverless Cars: Your Roadmap to Mega-Profits Today. In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Do We Advise Adding Goldman (GS) to Your Portfolio Now?
The Goldman Sachs Group, Inc. (GS - Free Report) can be a solid bet now on the back of its leading global position in completed mergers and acquisitions in 2016. The company’s strong client activity amid volatile markets is expected to yield positive results for the stock.
Further, the impending interest rate hike is anticipated to bring stability to the top line. This, in turn, is likely to attract long-term investors. Regulatory probes and litigation issues have been escalating legal costs for Goldman. However, sharper focus on reducing expenses by reorganizing business and improving revenues is boosting the bottom line and making the growth path smoother.
Therefore, at present, it’s a good idea to add stocks with robust fundamentals and long-term growth opportunities to your portfolio.
With $862 billion in assets as of Dec 31, 2016, Goldman’s strengths include effective cost management, business diversification and steady capital deployment activities.
8 Reasons Why Goldman's Golden
Revenue Growth: Goldman continues to make steady progress toward improving its top line. The company’s projected sales growth (F1/F0) of 6.53% (as against the S&P 500 average of about 4.24%) indicates constant upward momentum in revenues.
Earnings Per Share Strength: Earnings are anticipated to display an upswing in the near term, as the company’s projected EPS growth (F1/F0) is 18.34% compared to the industry average rate of 11.83%. Also, Goldman recorded an average positive earnings surprise of 15.25%, over the trailing four quarters.
Prudent Expense Management: Goldman has been benefiting from its successful expense-reduction initiatives for the past few years. Though expenses witnessed a volatile trend over the past few years, it declined significantly in 2016. Notably, the company carried out an expense initiative during the first half of 2016, which translated into run rate expense savings of around $700 million. It continued this initiative in the second half of 2016 as well, and generated nearly $900 million of run rate savings.
Diversification: While overall revenues have been affected by unfavorable market conditions in the last few quarters, Goldman remains well positioned for growth backed by its strong investment banking operations and solid client franchise. In traditional banking, a diversified product portfolio has higher chances of sustaining growth than many other banks.
Notably, Goldman has been undertaking initiatives to boost the GS Bank’s business by acquiring the online deposit platform of GE Capital Bank in Apr 2016. Recently, it also launched a digital consumer lending platform – Marcus by Goldman Sachs. Additionally, the company is likely to benefit from its exposure to the fast growing exchange-traded funds (ETF) market.
Favorable Zacks Rank: Goldman currently carries a Zacks Rank #2 (Buy). This has been driven by upward estimate revisions for the last 60 days. For 2017, the Zacks Consensus Estimate moved up around 2.9% to $19.28 and 4.4% to $21.95 for 2018.
Steady Capital Deployment: Goldman remains focused on managing capital levels efficiently. This is well evident from the approval of the 2016 Capital Plan. This plan includes hike in dividend and repurchase of common stock. Such capital deployment activities are anticipated to boost investors’ confidence.
Stock is Undervalued: Goldman has a P/E ratio of 13.07x, compared to the industry average of 17.52x. In addition, the company has a P/B ratio of 1.33x, compared to the industry average of 1.55x. Based on these ratios, the stock seems undervalued.
Share Price Movement: Goldman’s shares gained 48.9% over the last six months, compared with 40.4% growth in the Zacks categorized Investment Bank industry.
Bottom Line
Organic growth, expense management, robust capital position and steady capital deployment activities continue to support Goldman’s growth prospects. Furthermore, business diversification remains a key strength for earnings stability.
Stocks to Consider
Bank of America Corporation (BAC - Free Report) has been witnessing upward estimate revisions for the last 60 days. Further, the stock surged over 60% over the past six months. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
U.S. Bancorp (USB - Free Report) has been witnessing upward estimate revisions for the last 60 days. Also, the company’s shares have risen nearly 26.7% over the last six months. It presently holds a Zacks Rank #2.
Enterprise Financial Services Corp (EFSC - Free Report) has been witnessing upward estimate revisions for the last 60 days. Over the last six months, the company’s share price has been up more than 41%. It carries a Zacks Rank #2.
8 Stocks with Huge Profit Potential
Just released: Driverless Cars: Your Roadmap to Mega-Profits Today. In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>