Goldman Sachs stock price is being driven by downgrades in forward earnings estimates

April 30, 2023
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Goldman Sachs remains a leader in investment banking

Goldman Sachs is a leading global investment banking firm. Their activities are investment banking (20% of net revenue), global markets (40%), asset management (25%). As well as consumer and wealth management (15%) segments. Fixed Income, Currency, and Commodities comprise the Global Markets business.

Covering client-execution activities in credit products, interest rate products, mortgages, currencies, and commodities. Consumer & Wealth Management covers management and deposit-taking operations relating to wealth management.

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RECENT EARNING RELEASED WHAT IT MEANS

Goldman Sachs’ announced Q1-2023 EPS was $8.79, higher than Consensus Estimate of $8.13. Projected EPS estimates were $7.70. A much-improved performance compared to the poor Q4-2022 results reported in January. Compared to YOY, net revenues came in at $12.22 billion, a decline of 5%. In addition, the top line came in lower than the $13.02 billion Consensus Estimate. According to our projections, overall revenues came in at $12.8 billion.

GOLDMAN SACHS SLIDING FORWARD EARINGS ESTIMATES

The investment community is changing their expectations and forward estimates. This reflects trends in GS business divisions. Rising forward estimates should lead to an increase in th stock’s valuation. For all stocks, the correlation is positive and strong for earnings revisions and stock price. Let’s take a look at the evolving story about earnings estimates.

Goldman forecasted EPS is expected to be $7.91 in the quarter, Q2-2023. This would be a +2.3% increase over Q1. But consensus estimates are starting to be downgraded by -3.1% over the past month. Driving this is a mixture of the economic outlook and company-specific factors.

The consensus estimates for the full financial year 2023 are for an EPS of $31.90. This would be a 6.0% increase compared to 2022. Full year estimates are following quarterly estimates, so far falling around 2.7% over the past month.

Moving on to forward earnings estimates for $36.20 is current a +13.6% increase over full year 2023. This places the Goldman Sachs stock on a forward PE Ratio of 9.5X. This is also under pressure, with forward estimates falling around 6% recently.

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Financials Sector ans Goldman Sachs

The Financials Sector consists of companies providing financial services. These services cover banking, investment management, insurance, and real estate services. The financial sector plays a significant role in the economy. The sector by mediates capital distribution.

This could be for firms and individuals. They manage risks, and enable transactions. The financial sector is important to the economy, in providing financial service. The sector may be an appealing option for some investors seeking dividend-paying stocks.

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The XLF SPDR Fund aims to offer investment returns correlated to a benchmark index. The index is Financial Select Sector Index.

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Goldman Sachs stock price is being driven by downgrades in forward earnings estimates