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Solid Trading Activities to Aid Goldman's (GS) Q1 Earnings

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The Goldman Sachs Group’s (GS - Free Report) trading revenues, which are accounted in the Global Markets segment (constituting 47% of the top line), might have improved in the first quarter of 2021 on a surge in client activity, and boosted its overall performance. The company’s upcoming results are scheduled to be announced on Apr 14, before market open.

This year began on a positive note with vaccine breakthroughs, expectations of economic rebound and stimulus packages, which resulted in all the major indexes — the S&P 500, Dow Jones and Nasdaq — swinging to new highs. The above-mentioned factors, which led to a spike in volatility and higher client activities, are likely to have supported Goldman’s trading business.

The Zacks Consensus Estimate for net revenues in Fixed Income, Currency and Commodities Client Execution of $3 billion suggests a 59.6% jump from the quarter-ago reported figure. The consensus estimate for total equities revenues is $2.5 billion, which indicates a rise of 2.8% from the previous quarter.

Overall Earnings & Revenue Growth Expectations

The Zacks Consensus Estimate for Goldman’s earnings for the first quarter is pegged at $9.52, which indicates a substantial rise from the prior-year reported number.

The consensus estimate for sales of $11.5 billion suggests 31.5% growth on a year-over-year basis.

Apart from trading revenues, a few other factors are likely to have impacted Goldman’s overall performance during the first quarter.

Conclusion

A significant rise in trading revenues and impressive investment banking performance are likely to have supported the Zacks Rank #1 (Strong Buy) stock’s first-quarter revenues. However, near-zero interest rates and subdued loan demand are expected to have offset the same to some extent.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Trading Revenue Expectations for Other Banks

Trading revenues constitute a major portion of total revenues for Bank of America (BAC - Free Report) , Citigroup (C - Free Report) and Morgan Stanley (MS - Free Report) . Similar to Goldman, impressive trading performance is likely to have provided some support to these banks’ revenues and earnings in the first quarter.

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