Goldman Sachs Group Inc. (GS) - Value Stock Buy

Goldman Sachs Group Inc. (GS) is hitting new 52-week highs but its stock remains cheap as earnings estimates rise. The company is trading at just 10.9x estimates. As trading revenues have soared, analysts expect year over year earnings growth of 261.78%.

Company Description

Goldman Sachs Group is a financial services firm offering investment banking, securities and investment management services to corporations, governments and high-net-worth individuals.

Zacks Consensus Estimates Spiking

There hasn’t been much news out of Goldman Sachs since I last reviewed the company in July. But analysts continue to be extremely bullish on the company and estimates are jumping.

The third quarter Zacks Consensus Estimate rose 8 cents in just the last 7 days to $3.49 per share. That is up from $2.57 per share 90 days ago.

The outlook for the full year has also drastically changed in the last 3 months as the full year Zacks Consensus Estimate jumped nearly 30% to $16.17 from $12.45. It is up 20 cents in just the prior 7 days as 2 out of 19 analysts raised.

The company is scheduled to report third-quarter results on Oct 14.

Will the Third Quarter Be Another Record?

On July 14, Goldman Sachs reported record revenue for the second quarter which was a result of outstanding gains in the Trading and Principal Investments business segment which jumped 93% from the year ago period.

Several of its other segments saw recovery but not to 2008 levels. Investment banking was still 15% under the year ago quarter and the mergers and acquisition segment saw revenues decline 54% year over year.

Value Fundamentals

Goldman Sachs is a Zacks #1 Rank (strong buy) stock. It has a price-to-book ratio of just 1.59. Its 5-year average return on equity (ROE) is a stellar 22.55%.

Check out the 1-year chart below:

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