The Mega Banks Are Going to Benefit from the Slow but Steady Rise in Interest Rates

Goldman Sachs does not need much of an introduction, but for those who need a quick refresher, this large bank dwells in investment, lending, and other large-scale transactions. Not only that, they run hedge funds and were even one of the banks blamed for the 2008 financial crisis. Having financials in your portfolio is certainly a good choice as it allows you to ride the rising interest rate and it helps to maintain a well diversified portfolio. Now, taking a look at their most recent quarterly number, let us see how their fundamental health is doing. 

Published over a year ago
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Reviewed by Raphi Shpitalnik

Taking a look at their third quarter numbers, net revenues were reported at $8.17 billion and net earnings were reported at $2.09 billion. Goldman Sachs ranked first in worldwide announce and completed merger and acquisitions for the year-to-date. Book value per common share increased by 2.6% during the quarter and 6.0% during the year-to-date to $181.25. This company is a successful player in the financial field, but you still have to ensure they are not completing risky transactions or taking on more than they should in any given category.

Switching over to the chart and looking at a monthly time frame, we can see that price broke a resistance level and did so on respectable volume, which as a potential investor you want to see. Technically speaking, you can take a look at the old resistance level of about $211, and treat that as support now. This chart looks healthy and compared to the fundamental data, everything seems to be accurate, but be sure to not over use one over the other.

Typically, a company's financial statements are the reports that show the financial position of the company. There are three main documents that fall into the category of financial statements. These documents include Goldman Sachs income statement, its balance sheet, and the statement of cash flows. Potential Goldman Sachs investors and stakeholders use financial statements to determine how well the company is positioned to perform in the future. Although Goldman Sachs investors may use each financial statement separately, they are all related. The changes in Goldman Sachs's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on Goldman Sachs's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet, but not equivalent to net income shown on the income statement. Please read more on our technical analysis and fundamental analysis pages.
The goal of Goldman Sachs fundamental analysis is to do accurate financial forecasts. There are several possible objectives to fundamental analysis, such as projecting of Goldman Sachs performance into the future periods or doing a reasonable stock valuation. The intrinsic value of Goldman Sachs shares is the value that is considered the true value of the share. If the intrinsic value of Goldman is higher than its market price, buying is generally recommended. If it is equal to the market price, it is recommended to hold; and if it is less than the market price, then one should sell all shares Goldman Sachs. Please read more on our fundamental analysis page.

How effective is Goldman Sachs in utilizing its assets?

Goldman Sachs Group reports assets on its Balance Sheet. It represents the amount of Goldman resources that either has an existing economic value or will provide some form of benefits in the future. By effectively utilizing its assets, Goldman Sachs aims to generate revenue, control costs, drive operational efficiency, and enhance profitability. Optimizing asset utilization helps maximize shareholder value and maintain a competitive position in the Investment Banking & Brokerage space. To get a better handle on how balance sheet or income statements item affect Goldman volatility, please check the breakdown of all its fundamentals.

Are Goldman Sachs Earnings Expected to grow?

The future earnings power of Goldman Sachs involves the interaction of many company-specific, industry, and economic forces. Earnings estimates embody investors' opinions of Goldman Sachs factors such as sales growth, product demand, competitive industry environment, profit margins, and cost controls. Goldman Sachs stock prices adjust as these expectations change or are proven wrong. The main thing to remember is that equities with high expected earnings growth tend to underperform the market because it is usually difficult to meet the market's high expectations. Companies with low earnings expectations tend to do better than expected. Please use our latest analysis of Goldman expected earnings.

And What about dividends?

A dividend is the distribution of a portion of Goldman Sachs earnings, decided and managed by the company's board of directors and paid to a class of its shareholders. Note, announcements of dividend payouts are generally accompanied by a proportional increase or decrease in a company's stock price. Goldman Sachs dividend payments follow a chronological order of events, and the associated dates are important to determine the shareholders who qualify for receiving the dividend payment. Goldman one year expected dividend income is about USD7.42 per share.
At this time, Goldman Sachs' Dividend Yield is comparatively stable compared to the past year. Dividend Payout Ratio is likely to gain to 0.52 in 2024, despite the fact that Dividends Paid is likely to grow to (4 B).
Last ReportedProjected for 2024
Dividends Paid-4.2 B-4 B
Dividend Yield 0.03  0.03 
Dividend Payout Ratio 0.49  0.52 
Dividend Paid And Capex Coverage Ratio 5.19  4.93 
Investing in dividend-paying stocks, such as Goldman Sachs Group is one of the few strategies that are good for long-term investment. Ex-dividend dates are significant because investors in Goldman Sachs must own a stock before its ex-dividend date to receive its next dividend.
This type of analysis is very useful when you want to generate a past dividend schedule and payout information for Goldman Sachs. Then that information in the form of graph and calendar can be used to fully explain how Du Pont dividends can provide a real clue to its valuation.

Goldman Sachs Gross Profit

Goldman Sachs Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Goldman Sachs previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Goldman Sachs Gross Profit growth over the last 10 years. Please check Goldman Sachs' gross profit and other fundamental indicators for more details.

Another Deeper Perspective

Risks

Being a large bank, there are always risks involved as the company is invested in so many different areas of the financial world. You can take a look at their latest 10-K for a full list, but here are a couple to keep in mind. First, if there is another large economic slowdown, it could have an adverse affect on the company. With the 2008 crisis, we can see how real the effects can be and as a potential investor, you want to eliminate as much risk as possible. Secondly, the company could be affected by events outside the United States, and that could affect investors both positively and negatively, so be sure to stay abreast the latest news and data not only nationally, but internationally.

Conclusion

I’m a believer that most should own some sort of financial company in their portfolio. Of course there are better times than others to do so, but it brings a unique set of traits that other companies are unable to bring to your portfolio. Also, compare this bank with others in the industry to determine if you are getting the best value for your dollar. If you still have questions, reach out to an investing professional and they can certainly help point you in the right direction.

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Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Nathan Young do not own shares of Goldman Sachs Group. Please refer to our Terms of Use for any information regarding our disclosure principles.

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