Goldman Sachs (GS - Analyst Report) became a Zacks #2 Rank Buy in mid-April, with shares just under $200, after another big earnings beat. Analysts quickly raised EPS estimates for this year from $17.08 to $19.19, a 12.35% increase.
And analysts were also optimistic enough to boost 2016 estimates by 5% from $18.50 to $19.41. Recent agreement by more analysts has solidified the earnings outlook of the preeminent investment and trading bank sufficiently to make it a Zacks #1 Rank Strong Buy this week.
While the bump in estimates for 2016 only puts next year’s growth at a paltry 1%, maybe this month’s 7.5-year highs for GS shares are built on hopes of record Wall Street M&A deal-making, steeper yield curves, and more volatility in equities and bonds, which would only add to Goldman’s trading profits.
Whatever the reason for optimism getting baked into shares trading at an attractive sub-11X forward estimates, here are the Zacks Detailed EPS tables which show the agreement and magnitude of recent analyst revisions…
Financial stocks tend to do well near the end of an economic cycle as interest rates rise and stable cash flows are in demand. And investment banks do especially well as M&A heats up. This is not lost on investors who note that 2015 is well on-pace to beat 2007’s record-setting feat in that department.
As the economic expansion matures and super-attractive interest rates drive the scramble for more deal-making, money is flowing into GS shares and probably will continue to do so.
Could 2015 challenge another 2007 record as GS looks upward at $250? I’m not sure, but I wouldn’t bet against GS right here.
