By Justin Baer
Goldman Sachs Group Inc. is slated to report its fourth-quarter
results before the market opens Friday morning. Here's what you
need to know:
EARNINGS FORECAST: Goldman is expected to report a quarterly
profit of $4.32 a share, according to analysts polled by Thomson
Reuters. The Wall Street firm earned $4.60 a share in the same
period a year earlier.
REVENUE FORECAST: Analysts polled by Thomson predicted Goldman's
revenue would fall to $7.64 billion in the fourth quarter, down 13%
from a year earlier.
WATCH TO WATCH:
--Trading: Analysts are predicting Goldman's fixed-income,
currencies and commodities division should produce fourth-quarter
revenue that may fall short of what it tallied in the same period a
year ago. Stock trading revenue should pick up. As always, though,
investors and analysts will listen closely for any clues on how the
new year began for what remains Goldman's biggest business.
--Bonus Season: Goldman typically sets side less for employee
pay and other benefits during the fourth quarter, bringing its
full-year costs in line with past years. There's more at stake than
just employee bonuses. Compensation costs are Goldman's biggest
operating expense, and a sharp drop in any quarter will drop to the
bottom line. During the first nine months of 2014, Goldman's pay
costs totaled 43% of revenue. In 2013, the so-called "comp ratio"
was 37% of revenue.
--Deals: Investment-banking revenue may fall, as a drop in stock
and debt underwriting offsets what remains a good
mergers-and-acquisitions environment for corporate dealmakers --and
the investment banks that advise them.
Write to Justin Baer at justin.baer@wsj.com
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