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Once again, the quarter is not looking very promising for investment banks. If recent history can serve as reference, institutional banking (M&A, capital markets) and trading have suffered from an environment of macroeconomic uncertainty that included the U.S. government shutdown and interest rate hikes in 2018, and lingering Brexit concerns and trade war escalation in 2019.

It is against this backdrop that Goldman Sachs (GS) - Get Goldman Sachs Group, Inc. Report will report earnings on October 15. Analysts are looking for minimal revenue growth year-over-year, while consensus EPS of $5.54, if achieved, would represent a sizable drop of 12% over 2018 levels.

Will The Business Transformation Inspire Investors?

Goldman Sachs' top- and bottom-line growth will likely be hurt in the short term by the company's commitment to weed out weak performers and readjust its product portfolio. The fixed income, currencies and commodities (FICC) business comes to mind as one that will probably underperform once again, and act as a drag to financial results in the third quarter.

The better news is that Goldman Sachs has been on a transition journey intended to provide the company with more exposure to the consumer and small-to-mid sized enterprise businesses, and limit its traditionally heavy dependence on institutional banking.

Consumer digital banking platform Marcus, a venture that CEO David Solomon has compared to the likes of a successful Silicon Valley startup, will probably turn the narrative more optimistic on earnings day. Marcus, along with initiatives like the Apple  (AAPL) - Get Apple Inc. Report  credit card and footprint expansion into ETFs outside the U.S., should continue to fuel Goldman's slow transformation away from lumpy, fee-based, large-sized institutional services to more predictable and diversified "Main Street" businesses.

On the legacy end of the business, it will be interesting to see if Goldman Sachs' traditionally strong global M&A franchise will help it outperform the industry in advisory services once again. It would also help quite a bit if underwriting recovered from a couple of less-than-impressive quarters -- see the recent trend in investment banking revenues below.

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Source: Goldman Sachs' 2Q19 earnings slides

Harder to predict will be the performance of investing and lending, a business that currently accounts for roughly one-fourth of the bank's total revenues. Last quarter, the division performed very well on the back of rich private investment gains, which helped to send revenues and earnings well ahead of expectations. But due to the lumpy nature of this business, expectations should be set conservatively here.

Buying The "New Goldman Sachs"

It is hard to make a strong argument in favor of an investment bank stock during a time when the institutional business seems pressured from all sides. But Goldman Sachs may prove to be an exception to the rule, since the company has been trying hard to diversify into consumer and enterprise banking. Should the transition prove successful, substantial value could be created for shareholders.

Helping to support the bullish case on Goldman Sachs are de-risked valuations. The stock currently trades at a forward P/E of 8.3 that seems very conservative. For comparison, stocks of diversified financial institutions like Bank of America (BAC) - Get Bank of America Corp Report and Wells Fargo (WFC) - Get Wells Fargo & Company Report trade at richer multiples that hover around 10 and 11 times.

While I continue to favor an investment in JPMorgan (JPM) - Get JPMorgan Chase & Co. Report in the banking sector, I believe Goldman Sachs is a higher-risk, higher-reward play that bargain hunters looking for a potentially successful business model transition story might want to consider.

Goldman Sachs, Apple and JPMorgan are holdings in Jim Cramer'sAction Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells these stocks? Learn more now.

The author has no positions in any stocks mentioned in this article.