Goldman Sachs is set to announce its fourth-quarter earnings on Tuesday, and investors are eagerly awaiting to see the impact of the bank’s renewed focus on its core segments, following its retreat from the retail business.
Strong Q4 Performance Expected
Analysts predict that Goldman Sachs will report earnings of $3.62 per share for the fourth quarter, a significant increase from the $3.32 reported in the previous year. The revenue is also expected to show growth, with estimates reaching $10.8 billion, up from $10.6 billion recorded in the same period in 2022. However, it is worth noting that net interest income is forecasted to decline to $1.51 billion, down from $2.1 billion.
Stock Performance and Market Comparison
Goldman Sachs witnessed a 12% rise in its shares throughout 2023, primarily driven by a 19% increase in the last three months of the year. While this performance surpasses the 11% gain of the S&P 500, it lags behind the remarkable 25% surge of the SPDR S&P Bank ETF (KBE) during the same period.
Focus on Investment Banking and Trading
Investors are particularly interested in whether Goldman Sachs will provide guidance that indicates a shift back to its core strengths, namely investment banking and trading. In line with this potential change, the announcement of the sale of lending platform GreenSky in October hinted at the bank’s pivot away from the consumer business. This strategic move appears to have fueled the year-end rally of Goldman Sachs’ stock.
However, despite the positive market response, one analyst from BMO Capital Markets downgraded his rating on Goldman Sachs last week. His decision was driven by concerns over whether the stock can maintain its current valuation, considering its reliance on revenue from capital markets, an area known for its volatility.
As Goldman Sachs prepares to unveil its Q4 earnings, anticipation is high among investors. The focus on core segments and the strategic moves made by the bank in recent months will undoubtedly play a significant role in shaping the narrative surrounding its financial performance.