Before the Call: Goldman Sachs Glitters

After five straight quarters of blowing past its peers' earnings estimates, Wall Street institution Goldman Sachs (NYSE:GS) has begun to take on the identity of the company that can do no wrong. Or can it? Tomorrow's second-quarter 2007 earnings news will offer Goldman one more chance to prove or lose that label.

After the news comes out, we'll have time a-plenty to dissect it. But in these few hours before we begin obsessing over Goldman's short-term progress, let's take a moment to review what investors think about it as a long-term investment. Our tool in this endeavor: Motley Fool CAPS, where we poll more than 30,000 investors for their views on well over 4,000 companies, Goldman Sachs among them. Here's what Fools have to say about the company.

Up or down?
More than 2,000 investors have submitted ratings on Goldman, making it the 23rd most-rated company in all of CAPS-land. Their verdict: Goldman is golden.

Ninety-six percent of CAPS investors expect Goldman to outperform the market, and 95% of CAPS All-Stars give it the thumbs-up. That suffices to earn the stock four out of five possible stars on CAPS.

Among its CAPS peers, Goldman ranks as one of the better-liked prospects:

Wall Street vs. Main Street
There may be no honor among thieves, but there's plenty of respect among investment bankers. Wall Street investors, who presumably know Goldman better than anyone else, are unanimous in their enthusiasm for the stock. All four of the Goldman-tracking analysts that we track rate the stock an outperformer. Little wonder, considering that the stock is leading the S&P 500 by about 35 percentage points over the past 52 weeks.

Bull pitch
The top-rated bull "pitch" on CAPS says:

GS is the only practical and cost efficient way for an individual investor to participate in the wealth being created by hedge funds. [Editor's note: Since this pitch was penned, Fortress Group (NYSE:FIG) has come public, and Blackstone is soon to follow.] It is also one of the best ways for individual investors to take part in the fantastic money grab by private equity players. I have spent 30+ years investing and working on Wall Street. As a street veteran, I will confess that every other Wall Street firm has a well-founded inferiority complex concerning GS. The only really big mistake GS ever made was to go public. But they did, and now we can own a part of the best money machine in the world. I've owned it for 2+ years and am very happy with the results so far.

Bear pitch
The top-rated bear pitch starts off sounding like a rant, but ends up making a valid point:

I hate Abby Jo Co. I hate GS and everything it stands for. The company had 11x leverage in 2001. It has ballooned to 19x leverage on their speculative ops. Once the market turns and vol increases earnings go bye bye.

While that sounds a bit emotional, it does raise the interesting prospect of what happens to a firm that's trading heavily on margin, when the market turns south? The same margin that can magnify profits in a rising market, it seems, is just as capable of magnifying losses on the way back down.

Who said that?
To learn the identities of the wise Fools who penned these thoughts, and explore the plethora of additional financial data we've put together on the company, click here.

And to learn why we like -- and recommended -- top-ranked brokerage optionsXpress at the Fool's flagship stock picking newsletter, Motley Fool Stock Advisor, just click here to claim a free, 30-day trial, and read our full write-up.

Charles Schwab is also a Stock Advisor recommendation.

Fool contributor Rich Smith took David Gardner's advice and owns shares of optionsXpress. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked 461 out of more than 30,000 rated players. The Fool has a disclosure policy.