Earnings Reports

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Goldman Sachs, America's largest investment bank reported better than expected fourth quarter earnings before the bell Wednesday. $GS surpassed concerns exist over $GS trading revenue and delivered their highest EPS ever.

 GS Revenue 2018

 Goldman  Investment Revenues Jump in Q3

Goldman Sachs Group Inc NYSE: GS Reported Before Open Wednesday

$6.04 Beat $4.57 EPS AND $8.08B Beat $7.54 Billion Forecast in Revenue 

Earnings

Goldman Sachs Group Inc. (NYSE: GS) reported fourth quarter EPS of $6.04 on revenue of $8.08 billion beating the expected 4Q adj. EPS est. $4.57 (range $2.29 to $6.88) on 4Q net revenue est. $7.54b (range $6.02b to $8.60b). 4Q total trading revenue. est. $2.5b, with equities $1.57b, FICC $976.3m and I-banking revenue est. $1.93b were also expected (see breakdown below)

Goldman's a new CEO will be questioned about $GS place in the current macro environment but also over the 1MDB corruption probe; the stock has been rocked with inconclusive details on how to quantify the impact to the back and legal reserves needed by GS.

It is also gives a chance to rate the new CEO David Solomon and his new management team. The conference call will therefore focus more on future strategy. Asset management and consumer banking are expecting to be at the forefront. Analysts have cut estimates for Goldman, Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc., Morgan Stanley, and Wells Fargo & Co. by an average of 8.1 percent since the last quarter’s earnings reports. Goldman estimates have been slashed by 27 percent, underscoring the uncertainty.

Goldman Sachs Group Inc NYSE: GS

Market Reaction > Pre-market Pre-market $186.22 +6.31 (+3.51%) 

Highlights

  • Fixed income trading revenue fell 18% to $822 million
  • Equities trading rose 17% to $1.6 billion.
  • Investment banking revenue fell 5% to $2.04 billion.
  • Financial advisory revenue jumped 56% to $1.2 billion, led by increased M&A volume.
  • Investing and lending revenue dipped 2% to $1.9 billion.
  • Investment management revenue rose 2% to $1.7 billion.

"We are pleased with our performance for the year, achieving stronger top and bottom line results despite a challenging backdrop for our market-making businesses in the second half," said Chairman and CEO David Solomon. "For the year, we delivered double-digit revenue growth, the highest earnings per share in the firm's history and the strongest return on equity since 2009."

GS Q4 2018 earnings

 

Goldman Sachs Group Q3 Earnings Recap

$6.28 Beat Expected $5.38 EPS AND $8.646 Billion Beat $8.40 Billion Forecast in Revenue 

Earnings

Goldman Sachs Group Inc. (NYSE: GS) third quarter results saw EPS rise to $6.28 a share as revenue climbed to $8.646 billion. as Investment banking revenue beat expectations. Fixed-income trading revenue was light. Analysts were forecasting $5.38 in earnings per share (EPS) on $8.4 billion in revenue. Goldman shares have had a 52-week trading range of $210.95 to $275.31.

This is the first quarterly earnings release under the new CEO David Solomon and his new management team. Though it was the last operating quarter under Lloyd Blankfein. The conference call will therefore focus more on future strategy. Asset management and consumer banking are expecting to be at the forefront.

Goldman Sachs Group Inc NYSE: GS

Market Reaction > Pre-market 218.08 +2.86 (+1.33%)

Highlights

  • Total non-interest revenues improved 3% to $7.7 billion
  • Net interest income increased 17% to $856 million.
  • Operating expenses grew 4%  due to higher non-compensation expenses.
  • Investing and lending division made $1.86 billion in revenue, beating the $1.78 billion estimate. The division houses the firm’s Marcus consumer lending business, benefited from a 56 percent surge in net interest income to $700 million as the firm extended more credit to retail customers.
  • Investment management generated $1.7 billion in revenue beating the $1.66 billion estimate. The division contains an asset management business and private wealth management, rose 12 percent from the year earlier on growing fees from management and more assets under supervision.
  • Trading produced $3.1 billion in revenue, shy of analysts’ $3.16 billion estimate, driven by underperformance in the fixed-income business. That unit produced $1.31 billion in revenue, a 10 percent decline from a year earlier that missed expectations by $100 million.
  • Goldman blamed “significantly lower” demand for interest-rate products and lower demand for credit and mortgage trading.
  • Equities trading revenue produced $1.79 billion, 8 percent higher than a year earlier and $60 million above expectations, from stronger demand for derivative trading.
  • Annualized return on average common shareholders’ equity was 13.1% for the quarter while book value per common share as of September 30 was $186.62.

GS Earnings Q3 18

Last year the Federal Reserve restricted the payout plans of  $GS after the bank's numbers they submitted for annual stress tests fell below Fed targets. The Fed opted not to fail the bank regardless, instead giving them a "conditional" pass.

Source: Goldman Sachs, AlphaStreet


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