Published on March 17th, 2015 | by Daily Station Team
Goldman Sachs’ (NYSE: GS) Fourth Quarter Expectations
Goldman Sachs (NYSE: GS) is a well-known brand of American multinational investment banking. The firm handles global investment banking, investment management as well as other financial services like merger advice, underwriting services, prime brokerage and asset management. The bank enjoys the reputation of being among the premier banks globally.
The bank is all set to release its earnings on Friday but investors need to pay attention to whether targets were met or whether expectations were exceeded or not. The bank has shown exceptional performance in the past three quarters of 2014; analysts now need to pay close attention to determine whether similar growth could be expected as we enter 2015.
Being an investment bank is already a reason enough for the growth of the company, as the entire investment banking industry has been booming. Currently, the economic recovery is ongoing process, which might translate into the biggest growth factor for Goldman (NYSE: GS) Sachs and other such investment banks.
In its third quarter, the bank displayed a 26% year over year revenue and similar performance is expected in the fourth quarter as the economic recovery is ongoing, but it is important to determine as to whether the bank is growing because of the economy or due to its own business dealings.
For a better analysis, it is important to see where the stock stands, if it is already in the bull market for six years; as is the case with Goldman (NYSE: GS), then the firm’s assets are growing substantially and solely because of market performance. For Goldman (NYSE: GS), this meant $849 billion to $1.15 trillion in a matter of years.
Looking at the bank’s net flow of money, the free cash flow in the past quarter was an impressive $20 billion, which means that the bank is attracting new clients or the existing ones are letting the bank handle their extra cash. Whichever it is, it is bringing rise to business for Goldman Sachs’ (NYSE: GS).
Goldman (NYSE: GS)’s market share within the business sphere has also grown by 29%. These key points are indicators that Goldman (NYSE: GS) is heading towards growth in the upcoming quarters.
Another approach Goldman (NYSE: GS) has used is to buy back its shares and offer a higher dividend yield of 1.3% annually. This is the company’s way to return capital to the shareholders. In its third quarter, the firm bought 7.1 million shares in total, making up to 6.4% annual buy back rate.
Looking into Goldman (NYSE: GS)’s past years’ performance, the bank has produced strong results and the shares have also grown, in fact since 2012, they have doubled. Currently, the share is valued at 1.17 times higher than its book value and 11 times below its 2015 expectations. If the bank keeps performing this way, its market share will keep on growing. This makes Goldman (NYSE: GS) a confirmed winner for years ahead. This makes it a good stock for those looking to invest and those who have already invested.