SA News • Yesterday, 7:15 AM
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- GS is not suitable for either Defensive Investors or Enterprising Investors following the ModernGraham approach.
- According to the ModernGraham valuation model, the company is overvalued at the present time.
- The market is implying a modest 2.58% earnings growth over the next 7-10 years, but it is not supported by the rate the company has achieved in recent years.
- Goldman remains the premier investment bank.
- It generates enormous and reliable revenues.
- Although difficult to attach a valuation, Goldman's historical returns offer a guide.
- Goldman is a buy for moderate and aggressive investors.
- GS beat the top and bottom line consensus.
- The strong beat reaffirms our bullish thesis that GS is a top tier investment bank.
- We felt the company would continue its strong performance, but expected more from the stock price.
Goldman Sachs - Strong Quarter, Relative Appeal Remains
- Goldman Sachs posts very strong third quarter revenues and earnings.
- The company continues to demonstrate tight cost control, while returning cash to investors.
- I remain cautiously optimistic given the solid management of the bank and the fair valuation.
Is Goldman Sachs Poised To Beat The Whisper Number?
- The whisper number is $3.19, two cents behind the analysts' estimate.
- Goldman has a 77% positive surprise history (having topped the whisper in 36 of the 47 earnings reports for which we have data).
- The overall average post earnings price move is 'opposite' (beat the whisper number and see weakness, miss and see strength) when the company reports earnings.
- Goldman Sachs (GS) is scheduled to report 3Q2014 earnings before the opening bell on Thursday, October 16th.
- Earnings Per Share: The Street estimate is $3.21 with a range of $2.67 to $3.86.
- Revenues are seen coming in at $7.85 bln, an increase of 16.8% from 3Q2013. The range is $7.36 bln to $8.30 bln.
- We predict Goldman will beat EPS estimates by 10% and revenue estimates by 4.5%.
- Wall Street is predicting EPS of $3.24 and $7.72 billion in sales. Goldman releases Thursday morning.
- Citigroup, Morgan Stanley, Wells Fargo, JP Morgan, and Bank of America also release this week. We expect solid results from each of them.
Goldman Sachs Vs. Morgan Stanley: Which Is The Better Investment?
- Morgan Stanley has better EPS and revenue growth than Goldman.
- Goldman Sachs trades at a cheaper forward multiple than Morgan Stanley.
- Both are poised to benefit from continued strength in M&A activity and IPO demand.
- GS plans to close a deal as soon as this week to create an instant messaging service, formed from the startup platform Perzo.
- While the consortium structuring the deal includes peers BAC, MS, JPM, and HSBC, among others; GS appears to be reaping the majority of the PR benefits.
- This builds on Goldman's impressive net earnings in Q2 2014 of $2.04 billion, and growth in assets under management to a record $1.14 trillion.
- We continue to be optimistic on GS, moving into the remainder of 2014.
Goldman Sachs Continues Efforts To Increase Transparency And Investor Confidence
- GS is taking steps to ensure clients they can trade in a fair and equitable environment by endorsing new trading platform IEX.
- With its lower-frequency trading, IEX's platform is designed for more equitable outcomes and has already raised $75 million in its first round of financing.
- In July, GS reported a 5% rise in second-quarter profits rose five percent, reaching $2.04 billion, in a tough environment for mega-banks.
- We continue to be positive on GS moving forward in 2014.
- Second Quarter’s financial report with net revenue beat expectations by 33%.
- Number of outstanding shares compared to other big 5 banks supports value of the stock price.
- Financials and liquidity strong for Basel III requirements.
- Goldman Sachs likely to take advantage of foreign investment opportunities.
Invest Like Warren Buffett: Goldman Sachs Preferred Series K Yields 6.2%
- NYSE: GSpK - Perpetual 6.375% until May 10, 2024, 3 Month LIBOR + 355bps thereafter (Non-cumulative).
- Protection against increasing interest rates with variable interest structure after 2024.
- Warren Buffett made an attractive 10% return with Goldman Sachs preferred stock in 2008, now it is your turn!
Goldman Sachs Poised To Receive Boost From Increased Merger Activity In 2014
- International mergers and acquisitions activity has increased 53 percent since early this year, currently totaling $2 trillion.
- The health care industry has been outstandingly strong with an increase of 230 percent for $341 billion in mergers.
- A large player in M&A, Goldman Sachs, reported large increases in merger consulting revenue for the second quarter of 2014.
- With solid recent and historical results, we are increasingly positive on Goldman Sachs moving forward in 2014.
Goldman Sachs - Strong Results By This Well-Managed Banking Franchise
- Goldman Sachs reported very strong second-quarter results.
- Organic strength, driven by investment banking and less weakness in trading boosted results.
- Smart investments added to earnings, as Goldman's management has a strong long-term strong track record.
- Structural pressure on trading is now priced into the shares, I am cautiously optimistic.
Yum Brands And Goldman Sachs Lead Best Value Bond Trades With 1-5 Year Maturities
- On July 11, there were 14,118 bond trades in 2,840 non-call fixed rate senior corporate bond issues with principal of $3.2 billion.
- We rank the 20 "best value" trades by the ratio of credit spread to default probability.
- Yum Brands and Goldman Sachs lead the 20 "best value" trades by this criterion.
Yesterday, 7:15 AM
- Units of Goldman Sachs (NYSE:GS), BASF (OTCQX:BASFY), HSBC (NYSE:HSBC) and Standard Bank (OTCPK:SGBLY) have been sued in the U.S. over conspiring since 2007 to rig the twice-daily platinum and palladium "fixings" and the prices of futures and options based on those fixings.
- The plaintiff, a Florida-based maker of jewelry and police badges named Modern Settings, is claiming that metals purchasers lost millions of dollars due to the scandal.
- Last month, the London Metal Exchange said it will take charge of platinum and palladium price fixing, and use a new electronic platform from Dec. 1.
- The Hong Kong Exchanges and Clearing unit said the platform would replace a benchmark system established in 1989, run by Goldman, BASF, HSBC and Standard.
Thu, Nov. 20, 7:41 AM
- The incident on September 26 involved a junior employee passing along confidential information from the New York Fed - his former employer - to a senior executive at Goldman Sachs (NYSE:GS).
- The incident was immediately reported to its compliance team, regulators, and the New York Fed, says Goldman, and that employee along with a more senior employee who failed to escalate the issue were fired shortly thereafter.
Wed, Nov. 19, 3:26 AM
- Goldman Sachs (NYSE:GS) has cemented its position as the top Wall Street bank for M&A in 2014, as the industry hits one of its busiest years.
- Just this week, Goldman landed roles on two big acquisitions worth a combined $100B: Actavis' $66B agreement to buy Allergan and Halliburton’s $34.6B planned purchase of Baker Hughes.
- The bank has so far advised this year on $935B of M&A announcements and proposals world-wide.
Tue, Nov. 18, 3:44 PM
- Goldman Sachs (GS -0.1%) wasn't among the list of those punished in last week's foreign-exchange manipulation settlements, but the bank has fired a currency trader who was allegedly involved in the shenanigans before he became a Goldmanite.
- The trader joined Goldman Sachs in 2012 after working at HSBC where the alleged misdeeds apparently took place.
Mon, Nov. 17, 12:32 PM
- The Goldman Sachs Global Opportunities Fund - a $3.2B hedge fund which invests based on the top ideas from Goldman's (NYSE:GS) asset management unit's fixed-income team - bet on a rise in interest rates, but declined 5.6% for October after just the opposite happened, reports Bloomberg.
- Since inception in 2001, the fund has generated a net IRR of 9.1%, according to a Bloomberg source, but is off 2.6% YTD, setting it up for just its second calendar-year loss.
Wed, Nov. 12, 12:55 PM
- The new group in 2015 will bring the number of partners at Goldman Sachs (NYSE:GS) up to 467, or 1.6% of full-time employees, reports Reuters, citing an internal memo. The new class includes 23 from investment banking, 25 from securities, 11 from investment management, four from merchant banking, and 12 from the so-called "Federation" - back- and middle-office roles like finance, compliance, and risk-management.
Wed, Nov. 5, 1:24 PM
- Goldman Sachs (GS -0.2%) and others have until July 2015 to come into compliance with the Volcker Rule part of Dodd-Frank mandating the exit from certain types of trading with their own money.
- In Q3, Goldman sold another $285M in hedge fund holdings, bringing the total jettisoned to $2.55B, with immediate plans for $375M more. The bank still has work to do with about $11.4B more in funds subject to the Volcker Rule, and Goldman warns this won't be easy thanks to the illiquid nature of some of the investments.
Wed, Nov. 5, 7:11 AM
- It's only been since 2010 when U.S. firms began disclosing estimates for possible legal costs, and now it's become spectator sport in the banking sector. In Goldman Sachs' (NYSE:GS) 10-Q for the third quarter, the firm says its "reasonably possible" legal losses were $2.5B, down from $3.2B at the end of Q2.
Tue, Oct. 28, 12:30 PM
- Alex Dibelius is one of Germany's best-known rainmakers, thanks to working on some of that country's biggest deals, his high-profile divorce, and frequent appearances with celebrities.
- He'll be giving up his role as chairman of global industries at Goldman (GS). As co-chairman of investment-banking, he'll be joining Christopher Cole and Gordon Dyal.
- The investment-banking division at Goldman has been a fast-growing one this year, with revenue up 17% through the first nine months of 2014, the best performance of any bank.
Thu, Oct. 23, 4:49 PM
- Not having had the pleasure of being subject to the stress test and CCAR previously, Deutsche Bank's (NYSE:DB) U.S. unit will be a participant next year
- As in prior years, those BHCs with large trading operations - BAC, C, GS, JPM, MS, WFC - will be required to factor in a global market shock as part of their scenarios.
- Those six, plus STT and BK - thanks to their custodial operations - will be required to incorporate a counterparty default scenario.
- Among the items in the severely adverse scenario is the unemployment rate jumping to 10%, a 60% dive in the stock market, and oil jumping to $110 per barrel (how about oil falling to $10 per barrel?).
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, IAI, SEF, IYG, FXO, FNCL, KBWB, RKH, QABA, FINU, KCE, KRU, KBWR, RWW, RYF, KBWC, FINZ, KRS
Sun, Oct. 19, 10:08 AM
- Remember last summer's private-equity legal settlements which ensnared sector names like Carlyle Group (NASDAQ:CG), Blackstone (NYSE:BX), KKR, and the P-E arm of Goldman Sachs (NYSE:GS) for colluding to keep a lid on the prices of buyout targets? Needless to say, management didn't bear the burden of the settlement penalties, but neither did the shareholders. In the case of Carlyle at least, the $115M fine was shouldered by the investors in one of its buyout funds.
- Those investors include state and city workers and retirees from across the country, and chances are they were unaware they were responsible for these costs due to the highly secretive nature of the agreements made between P-E and the pension funds which invest in them.
- Disclosure "would cause substantial competitive harm," says a Carlyle spokesman. “This is an overreach on Carlyle’s part, and frankly it violates the spirit of the indemnification clause of our contract,” says NYC Comptroller Scott Stringer, who oversees three city pension funds invested in that particular Carlyle vehicle.
- Private-equity firms now manage $3.5T in assets, and pension funds have been among the more willing investors, with 10% of their assets - or $260B - in P-E. Yet the terms of their deals - including what they're paying to take part - are hidden from view despite open-records laws demanding just the opposite.
- “Hundreds of billions of public pension dollars have essentially been moved into secrecy accounts,” says former SEC lawyer Edward Siedle. "It’s very damning legal boilerplate that sums up the fact that they are the highest-risk, highest-fee products ever devised by Wall Street.”
- ETFs: PSP, PEX
Fri, Oct. 17, 2:50 PM
- Among the lenders now charging clients who want to park euros with them are Bank of New York Mellon (BK +0.2%), Goldman Sachs (GS +1.8%), and JPMorgan (JPM +1.5%), reports the WSJ. The banks themselves must pay to deposit money with the ECB after it imposed a negative rate on deposits last summer (and then made it more negative last month).
- Next up is HSBC which reportedly will son begin charging customers who deposit more than about €10M, and Credit Suisse (CS +1.1%) is set to do the same.
- Clients most immediately affected are investment firms, but multinationals with sizable European operations may soon face these costs.
Thu, Oct. 16, 3:41 PM
- Goldman Sachs (GS -2.6%) moved to get into the ETF business in late September, filing to launch a series of actively-managed ETFs, but that may not be fast enough, as Reuters reports the bank is in discussions to acquire IndexIQ.
- Should Goldman pull it off, it could be in the ETF business within months.
- IndexIQ at the moment offers ETFs in five sectors: Hedge fund replication, commodities, real estate, real return & inflation hedge, and international.
- On the company earnings call earlier today, Goldman CFO Harvey Schwarz spoke of the bank's willingness to make acquisitions if the deal was right.
Thu, Oct. 16, 1:03 PM
- Goldman Sachs (GS -0.8%) looks a lot different today than it did five years ago, writes Michael Moore, presenting a chart showing FICC revenue making up just 27% of the firm total vs. 53% in 2009. Also lower as a percent of firm-wide revenue is equities trading at 18% vs. 25%.
- Investment banking has a larger role at 19% vs. 9%; Investment & Lending 20% vs. 4%; Asset Management & Private Lending 17% vs. 9%. Should the volatility of the last few weeks continue, one suspects FICC revenue will again rise in importance.
- The sizable earnings beat is less impressive than the headline would suggest, says Moore, noting trading revenue - after excluding accounting gains and a benefit tied to a debt payoff - fell 11% from Q2, a worse result than that of competitors like JPMorgan, Citi, and BofA. Also helping was a cut in compensation cost to just 33% of revenue compared with 35% a year earlier - some analysts had expected the ratio to stay at the 43% level it had been at during Q1 and Q2.
- Previously: M&A and IPO action combine with Sept. volatility to boost Goldman results
Thu, Oct. 16, 10:27 AM
- Yesterday morning's panicky action is a reminder of the power of shifts in investor sentiment, says Goldman Sachs (GS -3%) CFO Harvey Schwartz on the company earnings call. Focus on the long run, he advises, and notes his team of economists assure him that long-term growth prospects remain positive.
- We seemingly talk about this every call, says UBS's Brennan Hawken, noting the bank continues to lose advisory market share. Goldman management continues to talk about increased client engagement which is nice, says Hawken, but when is this going to start dropping to the bottom line.
- Previously: M&A and IPO action combine with Sept. volatility to boost Goldman results
Thu, Oct. 16, 7:56 AM
- Q3 EPS of $4.57 compares with $4.10 in Q2 and $2.88 one year ago.
- Investment banking net revenue of $1.46B up 26% Y/Y, with Financial Advisory revenue of $594M up 40% thanks to busy M&A activity. Underwriting revenue of $870M up 17% thanks to fast IPO action, though debt underwriting revenue fell somewhat.
- Institutional Client Services revenue of $3.77B up 32% Y/Y, with FICC revenue of $2.17B up 74% (though a nonrecurring gain helped out a bit). The FICC boon came from significantly higher revenue in currencies, along with interest rates, commodities, and mortgages, offset by significantly lower revenue in credit products. Conditions in the latter part of the quarter were notably better (and no doubt have continued into Q4).
- Investing and Lending revenue of $1.69B up 15% Y/Y thanks to strong markets.
- Investment Management revenue of $1.46B up 20% Y/Y primarily due to higher assets under supervision.
- Expenses of $5.08B up 12% Y/Y, with compensation of $2.8B up 18%. The ratio of compensation and benefits to net revenue through the year's first nine months of 40% compares with 41% from the same period one year ago. Staff increased by 3% in Q3.
- 7.1M shares repurchased during Q at an average cost of $176 each. 32M shares remain in buyback program.
- Conference call at 9:30 ET
- Previously: Goldman Sachs boosts dividend
- Previously: Goldman Sachs beats by $1.36, beats on revenue
- GS -2.3% premarket as broader markets tank again
GS vs. ETF Alternatives
Goldman Sachs Group Inc is a investment banking, securities and investment management firm. Its segments include Investment Banking, Trading and Principal Investments, Asset Management and Securities Services.
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