TSC Ratings' Updates: Goldman Sachs

The gross profit margin for H&R Block is rather high, at 56%. Regardless of H&R Block's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the company's net profit margin of 20.8% significantly outperformed others in the industry. H&R Block had been rated a hold since May 2008.

Next up is Goldman Sachs (GS Quote), which was downgraded to hold. The company provides a range of investment banking, securities and investment management services to corporations, financial institutions, governments and high-net-worth individuals worldwide.

The gross profit margin for Goldman is rather high, at 64%. Regardless of Goldman's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, Goldman's net profit margin of 12% compares favorably to the industry average.

Goldman's earnings per share declined by 7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, Goldman increased its bottom line by earning $24.74 a share vs. $19.71 in the prior year. For the next year, the market is expecting a contraction of 32% in earnings ($16.81 vs. $24.74).

Goldman is off 19% from its price level of one year ago, reflecting a combination of the general market trend quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time. Goldman had been rated a buy since May 2008.