On Tuesday, Goldman Sachs (NYSE:GS) will kick off the earnings season for the big brokerage houses when it announces its fiscal first-quarter earnings.

What analysts say:

  • Buy, sell, or waffle? Twenty-one analysts currently follow Goldman. Twelve say it's a buy, nine are going with "hold," and none of them think you should be selling your Goldman stock.
  • Revenue. The average analyst estimate calls for $10.7 billion in revenue this quarter, a 2.5% improvement year over year.
  • Earnings. Earnings on average are expected to clock in at $4.90 per share, down from $5.08 last year.

What management says:
Goldman's management is fresh off a banner 2006 fiscal year, and they all took home bonuses that showed it. CEO Lloyd Blankfein took home north of $50 million for his efforts, and CFO David Viniar grabbed a cool $40 million. Goldman has a good thing going, and it knows it.

Viniar is quick to point out that since Goldman, like brokerages in general, is highly leveraged to global economic growth and business sentiment, it is very difficult to project future performance. That aside, he also pointed out that "while the entire industry benefited from a strong operating environment for most of the year, our business clearly outperformed ... While the environment was our friend in 2006, our performance reflects the unique competitive positioning of Goldman Sachs."

What management does:
The results have been nothing less than stellar recently, though there is plenty of talk about the gravy train starting to slow down. Goldman's fiscal third quarter for 2006 came in soft, as a tough period in the markets was compared to a strong quarter from 2005, but its most recent quarter showed the company still charging ahead.

Margin

8/05

11/05

2/06

5/06

8/06

11/06

Gross

92.2%

87.1%

93.8%

92.7%

89.5%

88.8%

SG&A

53.8%

45.3%

54.0%

53.3%

51.5%

32.3%

Net Income

21.9%

25.5%

23.8%

22.6%

21.0%

33.5%

Return on Equity

24.4%

23.9%

34.8%

30.5%

19.5%

36.4%

Y-O-Y Growth

8/05

11/05

2/06

5/06

8/06

11/06

Revenue

59.1%

38.2%

60.1%

107.9%

2.6%

46.9%

Earnings

84.0%

36.7%

64.0%

167.3%

(1.4%)

93.1%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data is quarterly ending the periods shown.

What CAPS says:
Goldman is a four-star stock in The Motley Fool's CAPS investing community. Goldman has been rated by a total of 1,483 CAPS members, with 1,406 outperform ratings to just 77 underperforms. Players that were bullish on Goldman also tended to tip their hats to NYSE Group (NYSE:NYX) and Altria (NYSE:MO).

One Fool says:
The recent wobbly markets have put a big fat question mark up next to the big brokerage houses. At one point, Goldman was down 14% from its late February peak, though it has since regained its footing to some extent. The decline wasn't without reason -- investors have started to question whether the market is as bulletproof as it recently seemed. Whether it's the suddenly ailing housing market, the scary drop in the Chinese markets, stubborn political instability around the world, or the continuing saga in the subprime loan market, there's plenty for investors to think about when it comes to Goldman's business environment over the next 12 months.

And speaking of subprime, the first question on Goldman's conference call last quarter regarded its exposure to the subprime market. There's been a lot of action since then, including the most recent announcement from New Century (NYSE:NEW) that it has stopped accepting new loans, so there's no doubt that subprime will be a focus point when the analysts get their shot at Dave Viniar this week.

Fool on:

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Fool contributor Matt Koppenheffer owns shares of Goldman Sachs, but does not own shares of any of the other companies mentioned. You can visit Matt's CAPS page, or check out his CAPS blog. The Fool's disclosure policy is as good as gold.