Goldman Sachs (NYSE: GS) stock rose 1.22% yesterday (Wednesday) to $178.75, ahead of today's Q4 earnings release.
Analysts project EPS of $4.21 on revenue of $7.71 billion. Those figures are down from last year, when GS reported EPS of $5.60 on revenue of $9.24 billion.
The bank is scheduled to report earnings at 7:30 A.M. EST and will follow up with a conference call at 9:30 A.M.
GS stock has performed well lately, up 10% in the last three months and 29% in the last year.
Interestingly, Goldman Sachs has beaten earnings estimates each of the last four quarters, but has also missed revenue estimates in each of those four quarters.
So what should GS stock investors watch in today's earnings?What to Expect from Goldman (NYSE: GS) Earnings
Analysts have pointed out that a lull in trading volume could equate to lower than projected earnings for Goldman Sachs.
Citigroup Inc. (NYSE: C) analyst Keith Horowitz recently estimated that Goldman Sachs could post a 21% decline in Q4 trading from fixed-income, currencies and commodities (FICC), compared to the same quarter in 2012.
Fixed income trading alone has taken a big hit in recent years. According to Goldman Sachs, fixed income trading accounted for $45.2 billion, or 48% of the company's total revenue, in 2009. Through three quarters of 2013, fixed income trading for GS had only totaled $25.4 billion, or 27% of revenue.
New regulations like the Volcker Rule have also had an impact on trading volume.
Analyst Brad Hintz from Sanford Bernstein said recently that the Volcker rule would limit trading and that"....higher funding costs, large liquidity pools, and longer tenure funding currently in place also limit Goldman's trading ROA (Return on Assets)."
Investors should not be surprised if these factors take a toll on GS earnings.Earnings Impact on Goldman Sachs (NYSE: GS) Stock
Goldman Sachs has already missed revenue estimates for four consecutive quarters, and the stock has still gained 30% in the last year. Trading volume may be down, but it won't spell doom for GS investors.
"All in all, we would say it looks slightly weaker and more stagnant than we would have thought a couple of months ago. But, on the other hand, it's stable, and stability counts for a lot in a group that has shattered investor confidence with negative surprises," Oppenheimer analyst Chris Kotowski told The Wall Street Journal.
It seems that the government doesn't want to tell us everything they know. Fortunately for us, the latest dismal jobs report told us what the government wouldn't...
- The Wall Street Journal: Slump in Trading Threatens a Wall Street Profit Engine
- Business Insider: Goldman Sachs Could Be the Biggest Loser on Wall Street this Quarter