Results: The Goldman Sachs Group, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates
The Goldman Sachs Group, Inc. (NYSE:GS) just released its latest quarterly results and things are looking bullish. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 15% higher than the analysts had forecast, at US$11b, while EPS were US$9.68 beating analyst models by 78%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
See our latest analysis for Goldman Sachs Group
After the latest results, the 20 analysts covering Goldman Sachs Group are now predicting revenues of US$38.0b in 2021. If met, this would reflect a credible 2.2% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 79% to US$23.74. Before this earnings report, the analysts had been forecasting revenues of US$37.7b and earnings per share (EPS) of US$23.11 in 2021. So the consensus seems to have become somewhat more optimistic on Goldman Sachs Group's earnings potential following these results.
There's been no major changes to the consensus price target of US$253, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Goldman Sachs Group, with the most bullish analyst valuing it at US$356 and the most bearish at US$200 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Goldman Sachs Group's revenue growth is expected to slow, with forecast 2.2% increase next year well below the historical 3.3%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.1% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Goldman Sachs Group.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Goldman Sachs Group's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$253, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Goldman Sachs Group going out to 2022, and you can see them free on our platform here.
Before you take the next step you should know about the 3 warning signs for Goldman Sachs Group (1 is potentially serious!) that we have uncovered.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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