Is August a good month for investing in Goldman Sachs shares?

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Jul 20, 2021
  • Goldman Sachs reported better than expected second-quarter results last week
  • The board of directors approved a 60% increase in the quarterly dividend
  • The Delta variant of the coronavirus continues to pose downside risks

The Goldman Sachs Group, Inc. (NYSE: GS) shares continue to trade in a bull market after strong second-quarter results. The second-quarter results contributed to the highest-ever first-half revenues of $33 billion and net earnings of over $12 billion; however, the Delta variant of the coronavirus continues to pose downside risks.

Fundamental analysis: The board of directors approved a 60% increase in the quarterly dividend

Goldman Sachs reported better than expected second-quarter results last week, and according to the technical analysis, shares of this bank remain in a buy zone. Total revenue has increased by 15.7% Y/Y to $15.39 billion, while GAAP EPS for the same period was $15.02 (beats by $5.07).

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It is important to say that the Investment Banking segment had its second-highest quarterly net revenues of $3.6 billion while the revenues from the Financial Advisory segment were $1.3 billion. Total revenue has increased above the expectations (+3.22 billion), and the board of directors approved a 60% increase in the quarterly dividend to $2.00 per common share.

This dividend will be payable on September 29 to stockholders of record as of September 1, 2021, and the current dividend yield stands at 2.2%. The bank reported a net income of $5.5 billion for the second quarter, while the second-quarter results contributed to the highest-ever first-half revenues of $33 billion and net earnings of over $12 billion.

“Our performance underscores the strength of our client franchise and the constructive but more normalized market environment relative to a year ago. Our results also reflect ongoing progress on the firm’s strategic priorities across all four of our businesses as laid out at our 2020 Investor Day,” said David Solomon, Chairman and Chief Executive Officer of Goldman Sachs.

During the second quarter, Goldman Sachs received preliminary approval for a joint venture with ICBC, China’s largest bank, representing a significant opportunity for Goldman Sachs to grow internationally.

Goldman Sachs shares could advance above the current price levels in August 2021; still, the Delta variant of the coronavirus continues to pose downside risks. Goldman Sachs investment banking segment received a boost from a post-COVID focus on corporate expansion, but the global economy could be hit again by the new lockdowns.

Technical analysis: $380 represents the first resistance level

Data source: tradingview.com

If the price jumps above $380, it would be a signal to trade shares, and the next target could be around $400. Rising above $400 supports the continuation of the bullish trend for Goldman Sachs shares, but if the price falls below $340, it would be a strong “sell” signal.

Summary

Goldman Sachs reported better than expected second-quarter results last week, and the board of directors approved a 60% increase in the quarterly dividend. Goldman Sachs shares continue to trade in a bull market, but if the price falls below $340, the next target could be around $320 or even $300.

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