Will Goldman Sachs (GS) beat quarterly earnings?

Analysis

The most concrete number is the consensus estimate for Goldman Sachs's third-quarter earnings: $12.90 per share, revised downward in the past seven days, according to the evidence gathered. That is well short of the $16.41 GAAP EPS the contract requires. The bank is scheduled to report on Tuesday, October 13, before the market opens. Costs are part of the reason for caution. Management has said it expects non-compensation expenses to rise by more than $500 million sequentially in the third quarter. That is guidance, not a result, but it points the wrong way for a bank that needs a big profit jump. Revenue expectations are solid, with a consensus of $16.87 billion, up 11.1% from a year earlier. Even so, the earnings estimate sits at $12.90, and the contract threshold is above it. The counterargument is real. In the second quarter Goldman reported record GAAP EPS of $20.98 against a consensus of $14.47, on revenue of $20.34 billion. A surprise on that scale would change the picture. Watch the October 13 trading and investment banking revenue lines. A second blowout there is the one thing that could push earnings past $16.41.