NEW YORK (TheStreet) -- Shares of Goldman Sachs Group Inc. (GS) are down by 0.96% to $189.67 in mid-morning trading on Monday, as the global investment banking, securities and investment management company raised the top end of its possible legal losses to $3 billion, the firm said in a regulatory filing, the Wall Street Journal reports.
In November Goldman's estimate, which keeps track of possible losses over what the company is keeping aside in reserves, was close to $2.5 billion, the Journal added.
Goldman said the increase is for "reasonably possible" losses and has nothing to do with the possibility of future claims stemming from the ongoing investigation by a U.S. task force set up to look into how banks created mortgage bonds that went bad during the financial crisis.
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In December the U.S. Attorney's office in the Eastern District of California sent Goldman a letter stating the prosecutors had determined the company was in violation of federal law having to do with underwriting, securitization, and the sale of mortgage bonds, the Journal added.
Separately, TheStreet Ratings team rates GOLDMAN SACHS GROUP INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate GOLDMAN SACHS GROUP INC (GS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its attractive valuation levels and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- GOLDMAN SACHS GROUP INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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 increased its bottom line by earning $17.07 versus $15.47 in the prior year. This year, the market expects an improvement in earnings ($17.20 versus $17.07).
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- GS, with its decline in revenue, slightly underperformed the industry average of 12.6%. Since the same quarter one year prior, revenues fell by 12.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, GOLDMAN SACHS GROUP INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- You can view the full analysis from the report here: GS Ratings Report