NEW YORK (TheStreet) -- Shares of Goldman Sachs Group (GS) are slightly lower in pre-market trade after it was reported that the investment firm is in talks to settle a Federal Housing Finance Agency claim the bank sold faulty mortgage-backed securities to Fannie Mae (FNMA) and Freddie Mac (FMCC), and will probably pay $800 million to $1.25 billion, sources told Bloomberg.
TheStreet Ratings team rates GOLDMAN SACHS GROUP INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate GOLDMAN SACHS GROUP INC (GS) a BUY. This is driven by a few notable strengths, 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, attractive valuation levels, growth in earnings per share, increase in net income and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- GS's revenue growth has slightly outpaced the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 2.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- GOLDMAN SACHS GROUP INC has improved earnings per share by 10.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, GOLDMAN SACHS GROUP INC increased its bottom line by earning $15.47 versus $14.15 in the prior year. This year, the market expects an improvement in earnings ($16.80 versus $15.47).
- 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 5.5% when compared to the same quarter one year prior, going from $1,931.00 million to $2,037.00 million.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. 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.
- You can view the full analysis from the report here: GS Ratings Report