Goldman Sachs is due to announce its 1Q16 earnings on April 19 before markets open. Analysts expect it to post earnings per share (or EPS) of $2.48, 45% lower than the same period last year. In the past four weeks, analysts have cut Goldman’s EPS estimate by nearly $0.94, or 22%, which led to a fall in the company’s stock price. This last minute cut is the largest for the bank since the financial crisis.
Goldman Sachs’ performance relative to peers
Large banks have the potential to impact the broader market indexes including the S&P Index Futures (SPY) and the corresponding financial ETFs. So far in 2016, shares of Goldman Sachs have fallen 15% and have underperformed the financial sector. The Financial Select Sector SPDR ETF (XLF) represents the US financials sector (VFH).
Since the beginning of 2016 through April 13, banking stocks have been under the knife due to fears of a global recession and a low interest rate outlook.
Year-to-date, shares of large-cap peer Morgan Stanley (MS) have plunged 23%. Comparatively, shares of Citigroup (C), J.P. Morgan (JPM), and Bank of New York Mellon (BK) have generated returns of -20%, -11%, and -12%, respectively. While all banks are expected to report weak earnings, analysts have cut Goldman’s EPS the most.
Read on to the next part to find out why.