Goldman Sachs (GS) May Continue Witnessing Revenue Pressure

On Sep 21, we issued an updated research report on The Goldman Sachs Group (NYSE:GS) . The company has been witnessing revenue pressure due to unfavorable market conditions. Also, its dependence on overseas revenues keeps us apprehensive.

On the other hand, the company has been successful in reducing expenses with the help of its cost-saving initiatives, but the pending legal hassles might weigh on its bottom-line growth.

Further, Goldman Sachs has been unsuccessful in gaining analysts confidence in terms of its future earnings. This is reflected by the slight downward revision in the Zacks Consensus Estimate for 2017 and 2018, over the last 30 days. The stock carries a Zacks Rank #4 (Sell).

Also, shares of Goldman Sachs have lost 3.4% year to date versus the industry’s rally of 2.7%.

Goldman Sachs’ net revenues have been declining due to lower client trading activities. Legislative challenges and low market volatility have been impacting its Institutional Client Services division. Further, management expects lower trading income in third-quarter 2017 due to the prevailing low volatility in the market.

The company is likely to face higher litigation provisions and legal expenses as it continues to face many investigations and lawsuits from investors and regulators.

However, Goldman Sachs remains committed to undertake expense-reduction initiatives. In 2016, the company successfully generated $1.6 billion run rate savings. Further, it is looking for opportunities that would aid growth.

Better-Ranked Stocks to Consider

Interactive Brokers Group’s (NASDAQ:IBKR) Zacks Consensus Estimate for current-year earnings was revised 3.4% upward for 2017, in the past 60 days. Also, its share price has increased 19.4% so far this year. The stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Raymond James Financial (NYSE:RJF) currently carries a Zacks Rank of 2. The stock’s current-year earnings estimates were revised slightly upward, over the past 60 days. Further, its shares have jumped 19.4% year to date.

Evercore Inc.’s (NYSE:EVR) Zacks Consensus Estimate for current-year earnings was revised 10.7% upward, over the last 60 days. Moreover, year to date, its shares have gained 12.6%. Also, it carries a Zacks Rank of 2.

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