When the company posted its 2016 first quarter financial results on Tuesday, shares immediately dropped in early trading due to a 55% year-over-year decline in profits and a 40% drop in revenue for the quarter.
Earnings of $2.68 a share beat Wall Street's projections of $2.45 a share, but revenue of $6.34 billion missed expectations of $6.73 billion.
"The operating environment this quarter presented a broad range of challenges, resulting in headwinds across virtually every one of our businesses," Lloyd Blankfein, Goldman's CEO stated.
As many banks have been facing numerous challenges, Goldman's trading revenue was adversely impacted by declining commodity and oil prices and concerns about China's economic health.
When we saw Goldman Sachs' earnings Tuesday, the stock would have been met with disappointment, but this market is quite forgiving. That has been true for much of earnings season so far, as the bar seems to be set quite low.
Having said that, we have seen the bank/investment broker stocks given a bit of a pass, even if they come up short. Goldman's revenues were weak, yet we find the stock up close to 8% in a couple of sessions. The chart told the story.
The upward channel shows a series of higher highs and higher lows since bottoming in February, and with recently strong volume (Tues/Wed) this stock is heading for the 200-day moving average (arrow).
Relative strength is as good as it's been since November, which was the last peak. Moving average convergence divergence (MACD) is on a buy signal, as it does not appear this stock is done going up.
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Separately, TheStreet Ratings team rates the stock as a "hold" with a ratings score of C+.
The company's strongest point has been its very decent return on equity which we feel should persist. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and feeble growth in the company's earnings per share.
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 article's author.
You can view the full analysis from the report here: GS