Goldman Sachs Stock Analysis: Systematic & Idiosyncratic Positive Outlook on Goldman Sachs Group

This article was written by David Shabotinsky, a Financial Analyst at I Know First, and enrolled at an undergraduate Finance program at the Interdisciplinary Center, Herzliya.



  • Goldman Sachs Group has been increasing both its top and bottom line even with low interest rates
  • Trump’s presidential election can help increase Goldman Sach’s influence over the financial world
  • Goldman Sachs has high and sustainable dividend yield
  • I Know First’s algorithm maintain a bullish forecast on GS

Goldman Sachs Stock Analysis


Founded in 1869, today Goldman Sachs Group Inc. (GS) is one of the largest and most powerful investment holding company around the world. Its main areas of service are investment banking, institutional client services, investment and lending, and investment asset management. The Company provides services to corporations, financial institutions, governments, and high-net worth individuals.

Over the past quarter, Q3 2016, even with a low interest rate environment, Goldman Sachs was able to post better than expected EPS at $4.88 per share beating the expectation of $3.86 per share. The main cause to this can be attributed to trading revenue being higher than expected.

As macro economic conditions are becoming more positive over the last month GS can be expected to continue to have an increase in revenues year over year. The reason being that expectations for an interest rate hike by the Fed is now between 90% and 100% as a result of a combination of a positive reaction to a Trump election and positive inflationary data. As interest rates are major source of revenue for banks across the board, this will immensely help Goldman continue its earnings rise. Additionally, GS has been able to capture what little the IPO market has been offering lately. For example, they’ve been selected along with Morgan Stanley, to lead Snap Inc.’s IPO, which is valued at around $25 billion.

Overall, they had reported revenues 8.71B compared to 6.86B a year prior in Q3 2015. Net income for Q3 rose in 2016 to 2.09B compared to 1.43B in 2015. Their margins as well have been improving with an increase in trading and better cost efficiency measures in place.


On a systematic level, the banking industry in the United States as been riding the ‘Trump victory wave’, as share prices have been on the rise with expectations of loosening of wall street regulations along with further tax cuts for wealthy households domestically. Trump’s current chosen administration team seems to be willing to repeal the post-crisis Dodd-Frank act, which was set to protect consumers from highly speculative and predatory banking practices. A repeal of the law, would allow GS to practice much more riskier investment strategies and thus possibility yielding a high profit in the process. However, even if congress and Trump’s administration choose not to repeal the act Goldman Sachs will have a large influence and voice in the executive branch, above other prominent banks. The reason is because one of Trump’s top choice for the Treasury secretary is Steve Mnuchin, a former Goldman Sachs partner. Additionally, Trump’s chief strategist, Stephen Bannon was a vice president at Goldman Sachs. Though this is no indication that they will be favorable towards the bank, in the past, especially before the ’08 crisis large banking institutions were accused by Congress of having received favors from ex-bankers who held high position in the executive branch.

In addition to systematic and fundamental value, Goldman Sachs is considered a behemoth amongst blue chip stocks with a dividend yield of 1.27%.  Their dividend is as well sustainable even in an economic downturn, as they continued to pay dividends during the Great Recession of 2008. Currently, Goldman Sach’s financial’s have been strengthening as represented by their balance sheet and its increasing capital ratios. Furthermore, the firm has a low dividend payout ratio, or dividends divided by net income, of 21% representing their ability to continue to paying dividends as they are able to reward shareholders.

I Know First Maintains A Bullish Position on GS

The I Know First algorithm identifies waves in the stock market to forecast its trajectory. Every day the algorithm analyzes raw data to generate an updated forecast for each market. Each forecast includes 2 indicators: signal and predictability. Currently, I Know First’s self-learning algorithm maintains a bullish forecast on GS, in accordance with the above analysis.


I Know First Past Success With GS

I Know First has been bullish on GS in past forecasts. This Warren Buffett Portfolio forecast, tracking companies within Buffett’s equity portfolio, had a bullish 14 days forecast on GS and saw an almost 10% return. This forecast was sent to current I Know First subscribers on October 26th, 2016. To subscribe today Click here.