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Goldman Sachs (GS) Earnings Improve

Apr 30 2010

Goldman Sachs (GS) Earnings Improve

I recently wrote about exiting a Goldman Sachs (GS) position because the earnings expectations were falling weekly leading up to an earnings release. Well let’s state for the record that selling a Goldman position before a government criminal probe is something that is lucky and makes for good conversation with wide smiles. But the odd thing about the stock movement down is the earnings estimates have now become very attractive.

The company beat by 40% the lowered earnings estimates for the March 2010 ending quarter and raised their outlook along with the analysts covering the company. A week ago analysts improved the company’s outlook from $4.39 a share for the current quarter to $4.69 a share. And the estimates were increased this week by one possibly over optimistic analyst, raising the average estimate to $4.70 share. The yearly estimate of earnings is also now looking rosy with the average estimate at $19.51 a share compared to an estimate of $18.17 a month ago.

All this good news in the face of a federal investigation aired on C-Span and news networks across the country into a $1 billion derivate deal that may have misled investors in 2007. In addition, public pension funds abroad and domestic are making statements about management reviews and contract terminations with the investment bank.

Is it time to buy Goldman Sachs again? Probably not until after a deal is reached with the government. And I would wait for a technical bottom on the stock price so as to not catch this falling knife, so to speak, and get cut in the process.

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