The Goldman Sachs Group, Inc. Just Recorded A 78% EPS Beat: Here's What Analysts Are Forecasting Next
The Goldman Sachs Group, Inc. (NYSE:GS) just released its latest third-quarter 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. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Goldman Sachs Group after the latest results.
Check out our latest analysis for Goldman Sachs Group
After the latest results, the consensus from Goldman Sachs Group’s 20 analysts is for revenues of US$38.0b in 2021, which would reflect a discernible 4.0% decline in sales compared to the last year of performance. Statutory earnings per share are predicted to surge 38% to US$24.08. In the lead-up to this report, the analysts had been modelling revenues of US$38.0b and earnings per share (EPS) of US$24.08 in 2021. The consensus analysts don’t seem to have seen anything in these results that would have changed their view on the business, given there’s been no major change to their estimates.
There were no changes to revenue or earnings estimates or the price target of US$255, suggesting that the company has met expectations in its recent result. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Goldman Sachs Group analyst has a price target of US$356 per share, while the most pessimistic values it at US$200. 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.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 4.0%, a significant reduction from annual growth of 3.8% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.3% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – Goldman Sachs Group is expected to lag the wider industry.
The Bottom Line
The most obvious conclusion is that there’s been no major change in the business’ prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year’s earnings. We have estimates – from multiple Goldman Sachs Group analysts – going out to 2022, and you can see them free on our platform here.
Don’t forget that there may still be risks. For instance, we’ve identified 3 warning signs for Goldman Sachs Group (1 is potentially serious) you should be aware of.
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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