Goldman Sachs Bracket Inc. (GS), whose stock has gone nowhere over the past two years as the firm has failed to keep pace with a at the speed of light changing financial industry, is expected to report third-quarter earnings on October 15. Investors will be looking for signify that Goldman’s new CEO David Solomon, who took over from long-standing chief Lloyd Blankfein last subside, is taking strides to keep the bank moving forward along its “evolutionary path.”
What Goldman Sachs Investors Are Watchful of For
Making the necessary changes will take time. Investors shouldn’t expect to see a huge rebound in earnings as Goldman widens expenses on new lines of business and financial products. Investors will want to see evidence that the revenue mix is shifting away from the bank’s accustomed trading and investment-banking activities and towards more retail-banking and lending activities, and that its revenue streams are becoming various durable.
Analysts’ 3Q Estimates
Wall Street analysts aren’t expecting any fireworks for Goldman’s upcoming third-quarter earnings article. They predict earnings per share (EPS) to fall by 12.1% from the three-month period a year ago, according to Yahoo! Bankroll. Revenues are expected to grow by just 0.50% from the year-ago period.
However, it wouldn’t be surprising to see the bank mix earnings expectations as it has done in the past four quarters. Earnings came in 18.8% above expectations in the last division. They were, however, lower than a year ago with expenses increasing as the bank spent heavily on retail banking and corporate-cash top brass initiatives. Revenue, which came in at $9.46 billion, also beat expectations, but was also lower than a year ago.
Falling Behind in a Double-quick Changing Industry
The financial industry is in the midst of the “Fourth Industrial Revolution,” according to Odeon Capital analyst Dick Bove, and Goldman Sachs is slip up oning it. Two of Goldman’s core businesses—trading and investment banking—have been hit by digitization, one of the leading reasons the bank’s interests are much lower than they were ten years ago. The bank has simply “failed to take the necessary steps to evolve with the modulations” Bove wrote in early September, per Bloomberg.
Specifically, Bove thinks the bank has missed out on increasing target stock exchanges, adding new innovative financial products, being more aggressive in the
Putting the Bank on an Evolutionary Path
In his opening communiqu during Goldman’s first quarter, Solomon
Looking Ahead
Still, all these changes will take pass before their positive impact on earnings and revenue start to show. Solomon emphasized this fact in Goldman’s first-quarter earnings inspire a request of, saying, “We’re looking to build value over the next three to five years, not over the next couple domiciles.”
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