On Monday, the U.S. Department of Justice (DoJ) announced that Goldman Sachs (GS – Analyst Report) has agreed to pay $5.1 billion for its role in the financial crisis of 2008. The company sold mortgage-backed securities (MBS) as high quality debt investments without informing investors of how risky those securities actually were.
Year-to-date, Goldman Sachs’ stock has lost 15.55% of its value. In my opinion, shares of the company could stand to lose some more weight than they already have. The company’s earnings and revenues are expected to decrease by 20.73% and 8.28%, respectively. The global bank is also sensitive to global volatility and commodity prices, so it’s especially risky to invest in right now.
What’s more is that the bank has a current ratio of 0.9 while having a debt-to-capital of 66.92%. This is means that Goldman Sachs does not have enough current assets in the short term to pay off its short term liabilities. In order to satisfy its liabilities over the short term, the company may have to issue more debt to its already-leveraged capital structure.
GS stock is going to be held back if the slew of negative earnings estimate revisions from analysts continues to pile on. Over the last 60 days, Goldman Sachs has had 19 negative earnings estimate revisions from analysts. In that same amount of time, no analysts have revised their estimates upwards.Our Earnings Consensus Estimate for this quarter has trended lower over the last 90 days, going from $5.16 to $2.72. That’s a huge fall in our EPS consensus.
Forget about Goldman Sachs, the stock is a Zacks Rank #4 (Sell), and it probably won’t build much wealth for you over the short term. Instead, check out these 3 buy-ranked financial stocks that have sizable earnings growth projected for this year.
Piper Jaffray Companies – (PJC – Snapshot Report)
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