TheStreet Ratings quantitative stock model maintains a Buy recommendation on Goldman Sachs Group (GS) - Get Goldman Sachs Group, Inc. (GS) Report , and has ever since coverage was initiated on February 4, 2002.
At that time, shares were valued at just $68.76 and the stock has never slipped into the Sell range of D+ or lower. On Tuesday afternoon, shares stood at $229.04 following the release of its second quarter earnings report in the morning.
While volatility in the share price is a negative, our model favors companies such as Goldman Sachs that exhibit strong quarterly financial statement performance.
If you prefer exchange-traded funds to holding individual stocks, you may want to consider funds with a large percentage of holdings concentrated in Goldman Sachs stock. The three of the four funds with the highest percentage of their assets in Goldman Sachs are Buy rated: iShares US Broker-Dealers and Sec Exchanges ETF (IAI) - Get iShares U.S. Broker-Dealers & Securities Exchanges ETF Report rated A with 9.1% of assets, SPDR Dow Jones Industrial Average (DIA) - Get SPDR Dow Jones Industrial Average ETF Trust Report rated A with 6.5%, and Nuveen Dow 30 Dynamic Overwrite Fund (DIAX) - Get Nuveen Dow 30 Dynamic Overwrite Fund Report rated A- with 6.3%.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate GOLDMAN SACHS GROUP INC as a Buy with a ratings score of B. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, expanding profit margins, good cash flow from operations and growth in earnings per share. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 15.8%. Since the same quarter one year prior, revenues rose by 30.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Capital Markets industry average. The net income increased by 25.6% when compared to the same quarter one year prior, rising from $2,255.00 million to $2,832.00 million.
- 48.91% is the gross profit margin for GOLDMAN SACHS GROUP INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 21.21% trails the industry average.
- Net operating cash flow has significantly increased by 71.34% to -$964.00 million when compared to the same quarter last year. Despite an increase in cash flow of 71.34%, GOLDMAN SACHS GROUP INC is still growing at a significantly lower rate than the industry average of 166.90%.
- GOLDMAN SACHS GROUP INC has improved earnings per share by 35.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GOLDMAN SACHS GROUP INC reported lower earnings of $8.61 versus $16.36 in the prior year. This year, the market expects an improvement in earnings ($23.25 versus $8.61).
- You can view the full analysis from the report here: GS
-- Reported by Kevin Baker in Palm Beach Gardens, FL
Disclosure: Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet, Inc. or any of its contributors.