As the fourth quarter earnings season unfolds, the spotlight is on two financial investment giants – BlackRock (BLK) and Goldman Sachs (GS). The recent impressive performance by BlackRock, which exceeded Q4 earnings expectations, has spurred curiosity about Goldman Sachs’ upcoming results amid anticipation and scrutiny from investors. This has sparked a debate – should investors buy stock in either of these financial powerhouses?
BlackRock Q4 Review
BlackRock delivered fourth-quarter earnings of $9.66 per share, surpassing the Zacks Consensus of $8.47 per share by a solid 9% and registering an 8% year-over-year increase. On the revenue front, Q4 sales of $4.63 billion slightly exceeded estimates of $4.62 billion, representing a substantial 7% surge from the prior-year quarter. Notably, BlackRock has now outperformed earnings expectations for six consecutive quarters, a streak that has certainly caught the attention of potential investors.
Image Source: Zacks Investment Research
The positive Q4 results coincided with the announcement of BlackRock’s acquisition of Global Infrastructure Partners GIIfor approximately $12 billion. The deal is expected to give rise to a leading infrastructure platform valued at over $150 billion. BlackRock’s strategic move is aimed at catering to the burgeoning investor demand in the fast-growing infrastructure segment, as it aligns with Global Infrastructure Partners’ reputation as a top player among independent infrastructure fund managers.
CEO Larry Fink hailed the deal as transformational, noting that the infrastructure sector is projected to be one of the fastest-growing segments of private markets. This bold initiative has drawn considerable praise from industry observers, reinforcing BlackRock’s position as an innovative and forward-looking investment management firm.
Image Source: BlackRock Q4 Investor Presentation
Goldman Sachs Q4 Preview
Investor attention is now fixed on Goldman Sachs’ Asset & Wealth Management segment, which has been instrumental in the company’s expansion amidst a recovery in capital markets. According to Zacks estimates, Goldman Sachs is expected to report a 4% increase in Q4 earnings to $3.47 per share, with sales projected to rise by 1% to $10.71 billion. The Zacks ESP (Expected Surprise Prediction) suggests that Goldman Sachs is likely to meet earnings expectations, given that the Most Accurate Estimate also stands at $3.47 per share, matching the Zacks Consensus.
Image Source: Zacks Investment Research
Goldman Sachs outperformed Q3 earnings expectations by 3% in October with EPS at $5.47 per share. However, it is worth noting that the company has fallen short of estimates twice in its last four quarterly reports, a factor that has raised some concerns among market analysts.
Image Source: Zacks Investment Research
Bottom Line
Currently, BlackRock’s stock holds a Zacks Rank #2 (Buy) while Goldman Sachs is at a Zacks Rank #3 (Hold). Both firms are expected to maintain their strong financial performance, with BlackRock particularly standing out for its consistent beating of earnings expectations over the past six quarters. As investors weigh their options, these rankings offer valuable insight into the current market sentiments towards these companies, guiding potential investment decisions.
