Investors in The Goldman Sachs Group, Inc. (NYSE:GS) had a good week, as its shares rose 3.0% to close at US$249 following the release of its yearly results. It looks like the results were a bit of a negative overall. While revenues of US$35b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 3.2% to hit US$21.03 per share. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the 19 analysts covering Goldman Sachs Group are now predicting revenues of US$36.7b in 2020. If met, this would reflect a credible 3.4% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to step up 14% to US$24.18. Before this earnings report, analysts had been forecasting revenues of US$36.0b and earnings per share (EPS) of US$23.76 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of US$259, suggesting that the company has met expectations in its recent result. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Goldman Sachs Group at US$341 per share, while the most bearish prices it at US$180. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. Analysts are definitely expecting Goldman Sachs Group's growth to accelerate, with the forecast 3.4% growth ranking favourably alongside historical growth of 1.1% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.1% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, analysts also expect Goldman Sachs Group to grow slower than the wider market.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. The consensus price target held steady at US$259, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that in mind, we wouldn't be too quick to come to a conclusion on Goldman Sachs Group. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Goldman Sachs Group going out to 2022, and you can see them free on our platform here..
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.