Goldman Sachs Group, Inc. (#GoldmanSachs) is one of the world’s leading names in banking, with operations in investment banking (20% of net income), global markets (40%), asset management (25%) and consumer and wealth management (15%). About 60% of the company’s net income is in the USA.
It will be one of the first major companies to report Q2 2021 company earnings, with its June quarterly earnings report due on Tuesday June 13 before the US markets open. Zacks forecasts sales for the quarter of $11.08 billion, lower than the previous quarter’s $17.70 billion and the same quarter 2020’s $13.30 billion. They forecast return per share for the quarter of $9.21, below the $18.60 in the previous quarter, but above the $6.26 in the year-ago quarter.
An interesting take on Goldman Sachs’ quarterly earnings is Zacks’ forecast for the past five quarters, which is significantly lower than the reported numbers. The company’s most recent quarter reported sales that were 49.94% above expectations ($17.70 billion vs. $11.96 billion) and reported a return per share that beat by 89.99% ($18.60 versus $9.79). It can be seen that the income was higher than the forecast number, which however did not help the company’s share price increase significantly and there was even a decrease in some quarters.
The current trend in the #GoldmanSachs stock price looks like trading pressure will drop ahead of next week’s report. With a bearish divergence (as seen last quarter), the share price has retreated to the MA50 area at 370.44. The MACD signal line and histogram moved near the 0 line, as did the RSI (a 51 level indicates a neutral market condition). There is the first support at the June low at 350.00, while the key resistance is at the previous high at 392.50.
JP Morgan Chase & Co (#JPMorgan), another financial institution that is due to report its earnings on the same day and before the market opens, is one of the largest and most complex financial institutions in the United States, with over $3 trillion in assets at the time of writing. In its quarterly report, Zacks forecasts company sales of $29.99 billion, below the $32.26 billion last quarter and below the $32.98 billion in the same quarter last year. Earnings per share (EPS) forecast is $3.03, below the $4.50 last quarter but above the $1.38 from Q220.
Statistics for the last four quarters have shown higher-than-expected returns per share, especially in the latest quarter, when it was 47.54% higher ($3.05 vs. $4.50), while the statistics on sales vs. forecasts are unclear.
The global financial sector in the second quarter should benefit from the successful vaccination programs and the easing of lockdown measures in major economies including the US (despite some countries now being in lockdown again), which means economic recovery and the confidence that comes with credit demand. In the medium term, financial conglomerates may benefit from interest rate hikes, as the Fed began signaling in the middle of last month.
As for #JPMorgan’s share price this year, it’s up more than 20% but has started to slow in the second quarter. Now we see bearish divergence in both the Day and Week timeframes, as well as the share price. Right now, the share price is stuck between the trendline and the MA50; if the earnings report is lower than expected there will be the first support at 147.00 and the next one at the previous year’s high at 140.00, while the first resistance is at the MA200 area at 157.00 and the next resistance is at the previous high at 167.00.
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Chayut Vachirathanakit
Market Analyst – HF Educational Office – Thailand
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