On Mar 8, 2013, we reiterated our long-term recommendation on
The Goldman Sachs Group, Inc.
) at Neutral based on its well-managed global franchise, strong
capital base and recent investments. However, regulatory issues
coupled with fundamental pressure on the banking sector are
expected to dent its financials in the upcoming quarters.
Goldman reported its fourth-quarter 2012 earnings per share of
$5.60, significantly surpassing the Zacks Consensus Estimate of
$3.47. Moreover, the reported earnings outpaced the prior-year
quarter earnings of $1.84 and prior-quarter earnings of $2.85 per
Amid challenging global markets and the European debt crisis, the
results were driven by Goldman's record revenues with an
elevation in client activity. Further, sturdy capital ratios
depict Goldman's financial strength.
Yet, escalated operating expenses acted as a headwind for the
fourth quarter. Operating expenses ascended 3% to $4.9 billion
compared with the prior-year quarter. Additionally, results
included net provisions of $260 million for regulatory
Though the U.S. economy posted stable to improving economic data
during 2012, including favorable developments in unemployment and
housing, concerns about the outlook for the global economy and
continued political uncertainty persist.
Following fourth-quarter 2012 results, the Zacks Consensus
Estimate for 2013 increased 2.6% to $13.27 per share as 11 out of
21 estimates were revised higher over the last 60 days. For 2014,
8 of the 17 estimates moved north over the same time frame,
lifting the Zacks Consensus Estimate by 3.7% to $14.89 per share.
With the upswing in the Zacks Consensus Estimates, Goldman
retains a Zacks Rank #2 (Buy).
Other Major Banks to Consider
Evercore Partners Inc.
Knight Capital Group Inc.
Piper Jaffray Companies
) hold a Zacks Rank #1 (Strong Buy).
EVERCORE PARTNR (EVR): Free Stock Analysis
GOLDMAN SACHS (GS): Free Stock Analysis
KNIGHT CAP GP (KCG): Free Stock Analysis
PIPER JAFFRAY (PJC): Free Stock Analysis
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