Earnings Reports

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Goldman Sachs, America's largest investment bank reported better than expected second quarter earnings before the bell Tuesday. $GS saw lower revenues in investment management and investment banking, partially offset by higher revenues in investing & lending. Equities net revenues rose to $2.01 billion, the highest in four years.

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Goldman Sachs Group Inc NYSE: GS Reported Before Open  Tuesday

$5.81 Beat $4.93 EPS and $9.46 Bil Beat $8.90 Billion Forecast in Revenue

Earnings

Goldman Sachs (NYSE: GS) reported a 3% drop in second-quarter earnings but beat analysts’ estimates. Net income attributable to common shareholders was $2.2 billion or $5.81 per share in the second quarter, lower than $2.35 billion or $5.98 per share reported a year earlier. Analysts had forecast a lower profit of 4.93 per share. Revenues decreased 2% from last year to $9.46 billion during the Q2 but came above analysts’ forecast. The decrease mainly reflects lower revenues in investment management and investment banking, partially offset by higher revenues in investing & lending.

Earnings Forecast

  • 2Q adjusted EPS estimate $4.93 (range $4.38 to $5.52)
  • 2Q net revenue estimate $8.90 billion (range $8.62 billion to $9.36 billion)
  • 4Q equities trading revenue estimate $1.84 billion (Bloomberg MODL, 8 ests.)
  • FICC $1.60 billion (8 ests.)
  • I-banking revenue est. $1.91 billion
  • 2Q Preview Call 9:30am 1-888-281-7154

Goldman's still 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 another  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 had 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 prior to last quarter’s earnings reports. Goldman estimates had been slashed by 27 percent, underscoring the uncertainty.

Goldman Sachs Group Inc NYSE: GS

Market Reaction > Pre-market $215.21 USD +3.64 (+1.72%)

Highlights

  • Investment banking revenue fell 9% year-over-year to $1.86 billion, it exceeded consensus estimates.
  • Equities net revenues rose to $2.01 billion, the highest in four years aided by the strength of equities client execution reflecting higher revenues in cash products and derivatives.
  • Annualized return on equity was 11.1% in the second quarter.
  • At the end of the quarter, book value per common share was $214.10, up 2.4% from the corresponding period of 2018.
  • In the June quarter, provision for credit losses decreased 9% annually to $214 million, owing to a dip in provisions related to purchased credit-impaired loans.
  • Total operating expenses remained broadly unchanged year-over-year at $6.12 billion.

David Solomon, chief executive officer of Goldman Sachs, said, “Given the strength of our client franchise, we are well-positioned to benefit from a growing global economy. And, our financial strength positions us to return capital to shareholders, including a significant increase in our quarterly dividend in the third quarter.”

Goldman Sachs Q2 2019 earnings

Goldman Sachs Group Q1 Earnings Recap

$5.71 Beat $4.89 EPS BUT $8.81B Missed on $8.90 Billion Forecast in Revenue

Earnings

Goldman Sachs Group Inc. (NYSE: GS) report first quarter earnings of $2.25 billion of profit in the period, or $5.71 a share ahead of the $4.89 estimate but revenue fell 13% to $8.81 billion less than analyst’s $8.9 billion expected. The miss was blamed on lower results in the bank’s Wall Street trading and investing and lending segment. The Whisper number was $5.21.

 Shares closed Friday at $207.84 with a 52-week range of $151.70 to $262.25. 

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 another  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 had 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 prior to last quarter’s earnings reports. Goldman estimates had been slashed by 27 percent, underscoring the uncertainty.

Goldman Sachs Group Inc NYSE: GS

Market Reaction > Pre-market $202.58 USD −$5.24 (2.52%)

Highlights

“We are pleased with our performance in the first quarter, especially in the context of a muted start to the year,” Goldman CEO David Solomon said in the release. “Our core businesses generated solid results driven by our strong franchise positions. We are focused on new opportunities to grow and diversify our business mix and serve a broader range of clients globally.”

  • GS announced $3.26 billion in pay and benefits for the quarter, 20% less than a year ago and well below the $3.58 billion estimate.
  • The firm also trimmed headcount by 2% from the fourth quarter.
  • Its institutional client services trading division posted $3.61 billion in revenue for the quarter, an 18 percent decline from a year earlier.
  • Revenues from fixed income and equities trading came in at $1.84 billion and $1.77 billion.
  • investment banking division revenue of $1.81 billion, roughly unchanged from a year earlier
  • Advisory revenue jumped 51% to $887 million on robust mergers and acquisitions activity.
  • The investing and lending segment posted $1.84 billion in revenue, a 14 percent decline driven by “significantly lower net gains” from stakes in private equities and debt holdings.
  • Goldman’s smallest division, investment management revenue dropped by 12% to $1.56 billion, below analysts’ $1.71 billion estimate, on “significantly lower incentive fees and lower transaction revenues” amid tough markets.
  • The firm’s provision for credit losses climbed to $224 million in the quarter, roughly unchanged from the previous period but surging from the first quarter of 2018, where it was $44 million, as Goldman expanded its retailing lending operations.

The bank’s board voted to increase its quarterly dividend by 5 cents to 85 cents per share, a move that had been expected by investors.

 

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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