The Goldman Sachs Group, Inc. (GS) Is a Trending Stock: Facts to Know Before Betting on It

Goldman Sachs (GS) is one of the stocks most watched by Zacks.com visitors lately. So, it might be a good idea to review some of the factors that might affect the near-term performance of the stock.Shares of this investment bank have returned +12.2% over the past month versus the Zacks S&P 500 composite's +1% change. The Zacks Financial - Investment Bank industry, to which Goldman belongs, has gained 10.4% over this period. Now the key question is: Where could the stock be headed in the near term?While media releases or rumors about a substantial change in a company's business prospects usually make its stock 'trending' and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.Earnings Estimate RevisionsHere at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.Goldman is expected to post earnings of $7.93 per share for the current quarter, representing a year-over-year change of +44.7%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.1%.The consensus earnings estimate of $37.15 for the current fiscal year indicates a year-over-year change of +62.4%. This estimate has remained unchanged over the last 30 days.For the next fiscal year, the consensus earnings estimate of $42.65 indicates a change of +14.8% from what Goldman is expected to report a year ago. Over the past month, the estimate has changed +0.1%.With an impressive externally audited track record, our proprietary stock rating tool -- the Zacks Rank -- is a more conclusive indicator of a stock's near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for Goldman.The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:12 Month EPSRevenue Growth ForecastEven though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.In the case of Goldman, the consensus sales estimate of $12.02 billion for the current quarter points to a year-over-year change of +6.2%. The $51.62 billion and $55.64 billion estimates for the current and next fiscal years indicate changes of +11.6% and +7.8%, respectively.Last Reported Results and Surprise HistoryGoldman reported revenues of $12.7 billion in the last reported quarter, representing a year-over-year change of +7.5%. EPS of $8.40 for the same period compares with $5.47 a year ago.Compared to the Zacks Consensus Estimate of $11.63 billion, the reported revenues represent a surprise of +9.24%. The EPS surprise was +22.63%.The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates each time over this period.ValuationNo investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an An is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.Goldman is graded F on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.Bottom LineThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Goldman. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Goldman Sachs Group, Inc. (GS): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks