Goldman Sachs Earnings Preview

Goldman Sachs will likely deliver quarterly results that exceed Wall Street’s expectations, but the headline numbers will reflect falling profits.

 

Goldman Sachs [[GS]] is scheduled to report their second quarter 2010 results before the market opens on Tuesday, July 20.

 

Last quarter, the Goldman reported earnings results that were $1.58 above Wall Street’s consensus estimates. However, GS shares fell 2% following the earnings announcement.

 

The current Wall Street consensus estimates are for revenues of $9.39 billion and EPS of $2.25. This would imply a 32% decline in revenues over last year’s $13.76 billion. However, analysts expect profits to drop by over 50%. 

 

Goldman Sachs shares have plunged 18% this year as the stock has badly underperformed the 3% decline in the S&P 500 index. Last year, GS shares doubled as they outpaced the 23% gain in the S&P 500.

 

Goldman stock is currently trading at only 7x consensus 2011 EPS estimates. Goldman Sachs will likely deliver another strong quarter, but the company is also embroiled in a harmful investigation with the SEC. Given the uncertainty of that investigation, the stock will likely remain at depressed levels for the near term.

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