Tuesday, October 7, 2014

* Goldman Sachs (GS) - Impossible Charts You Simply Won't Believe... and Then You Will.

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GS stock is up 3.7% in 2014, MS is up ~11.5% and LAZ is up 12.8%. If we throw in the large US banks (JPM +3%, C +0.25%, WFC +14% and BAC +11%) we see that GS is a relative under-performer, though certainly not the worst, it's near the bottom.

Further, GS has seen its revenue drop 30% over the last 4+ years which is the worst (by a lot) of all peers and its net income has dropped by nearly 50%, also, by far, the worst of any peer.

What's Going on at Goldman?

There are some troubling trends. I'll show four charts, all of which look... not so good...

Revenue, 1-year Growth on the x-axis and Earnings, 1-Year Growth on the y-axis, we can see GS is simply... the worst of this peer group (yes the peer group is imperfect).

Total Revenue (TTM)
Over the last 4+ years, GS has seen revenue drop 30%.  For comparison sake, MS has seen a 15% rise in revenue.

Peer Comp: Revenue Since 2010
Here are some relevant peers during that same time period, and their revenue changes.  GS is by far the worst.

Net Income (TTM)
Over the same time period, GS has seen net income drop nearly 50%.  In this same time period, MS net income has risen 33%, LAZ has gone from a loss to a $280 profit and BAC is up over 50%

Peer Comp: Revenue Since 2010
Here are some relevant peers during that same time period, and their net income changes.  GS is by far the worst. Note that C saw a 600%+ rise and is not pictured so the chart doesn't get out of whack, and LAZ went from a loss to a $280M gain (impossible to calculate a percentage gain).

The last chart may be the most disturbing.  On the x-axis we have Asset Growth, 1-Year and on the y-axis we have Gross Profit Growth, 1-Year.  We can see that GS is essentially on a different chart than the rest of the peers.

This is trade analysis, not a recommendation.

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