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Why Is Goldman (GS) Up 12.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for Goldman Sachs (GS - Free Report) . Shares have added about 12.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Goldman due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Goldman’s third-quarter 2024 adjusted earnings per share of $8.40 surpassed the Zacks Consensus Estimate of $6.85. This compares favorably with $5.47 reported in the year-ago quarter.
As expected, the IB business witnessed a solid growth. Equity underwriting fees jumped 25% and debt underwriting fees grew 45.8%. Also, advisory fees rose 5.3%. Overall, total IB fees were up 20% from the prior-year quarter to $2.27 billion.
Goldman’s results benefited from a strong performance in its IB business and a solid Asset & Wealth Management division. A decline in expenses was another positive. However, a rise in provisions and a weak capital position remains a concern.
Net earnings (GAAP basis) of $2.9 billion increased 45.3% from the prior-year quarter.
Goldman’s Revenues Increase and Expenses Fall
Net revenues for the quarter of $12.7 billion increased 7.5% from the year-ago quarter. Also, the top line surpassed the Zacks Consensus Estimate of $11.63 billion.
Total operating expenses decreased 8.2% year over year to $8.31 billion. The decline was due to a fall in compensation and benefits costs, depreciation and amortization costs, along with occupancy and other expenses.
Provision for credit losses was $397 million, which increased significantly from $7 million in the third quarter of 2023.
The Asset & Wealth Management division generated revenues of $3.75 billion in the reported quarter, up 16.2% year over year. The improvement was driven by higher management and incentive fees, increased net revenues in private banking and lending fees and equity investments, partially offset by lower net revenues in debt investments.
Firmwide assets under supervision were a record $3.1 trillion, up 15.8% from the prior-year quarter.
The Global Banking & Markets division has recorded revenues of $8.6 billion, which increased 6.8% year over year. The improvement was driven by an increase in the IB business, along with a rise in equities revenues, partially offset by Fixed Income, Currency and Commodities Client Execution financing revenues.
The Platform Solutions division’s revenues were $391 million, down 32.4% year over year. The fall was due to lower revenues from consumer platforms as well as transaction banking and other.
Goldman’s Capital Ratios Deteriorate
As of Sept. 30, 2024, the standardized Common Equity Tier 1 capital ratio was 14.6%, down from 14.8% as of Sept. 30, 2023. The company’s supplementary leverage ratio was 5.5%, down from 5.6% as of Sept. 30, 2023.
Goldman’s Capital Distribution Update
During the reported quarter, Goldman returned $1.98 billion of capital to common shareholders. This included $1 billion in share repurchases and common stock dividends of $978 million.
2024 Outlook
The company expects the tax rate to be around 22%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Goldman has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Goldman has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Goldman (GS) Up 12.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Goldman Sachs (GS - Free Report) . Shares have added about 12.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Goldman due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Goldman Q3 Earnings Beat on Higher IB Revenues & Lower Expenses
Goldman’s third-quarter 2024 adjusted earnings per share of $8.40 surpassed the Zacks Consensus Estimate of $6.85. This compares favorably with $5.47 reported in the year-ago quarter.
As expected, the IB business witnessed a solid growth. Equity underwriting fees jumped 25% and debt underwriting fees grew 45.8%. Also, advisory fees rose 5.3%. Overall, total IB fees were up 20% from the prior-year quarter to $2.27 billion.
Goldman’s results benefited from a strong performance in its IB business and a solid Asset & Wealth Management division. A decline in expenses was another positive. However, a rise in provisions and a weak capital position remains a concern.
Net earnings (GAAP basis) of $2.9 billion increased 45.3% from the prior-year quarter.
Goldman’s Revenues Increase and Expenses Fall
Net revenues for the quarter of $12.7 billion increased 7.5% from the year-ago quarter. Also, the top line surpassed the Zacks Consensus Estimate of $11.63 billion.
Total operating expenses decreased 8.2% year over year to $8.31 billion. The decline was due to a fall in compensation and benefits costs, depreciation and amortization costs, along with occupancy and other expenses.
Provision for credit losses was $397 million, which increased significantly from $7 million in the third quarter of 2023.
Goldman’s Quarterly Segmental Performance Improves
The Asset & Wealth Management division generated revenues of $3.75 billion in the reported quarter, up 16.2% year over year. The improvement was driven by higher management and incentive fees, increased net revenues in private banking and lending fees and equity investments, partially offset by lower net revenues in debt investments.
Firmwide assets under supervision were a record $3.1 trillion, up 15.8% from the prior-year quarter.
The Global Banking & Markets division has recorded revenues of $8.6 billion, which increased 6.8% year over year. The improvement was driven by an increase in the IB business, along with a rise in equities revenues, partially offset by Fixed Income, Currency and Commodities Client Execution financing revenues.
The Platform Solutions division’s revenues were $391 million, down 32.4% year over year. The fall was due to lower revenues from consumer platforms as well as transaction banking and other.
Goldman’s Capital Ratios Deteriorate
As of Sept. 30, 2024, the standardized Common Equity Tier 1 capital ratio was 14.6%, down from 14.8% as of Sept. 30, 2023. The company’s supplementary leverage ratio was 5.5%, down from 5.6% as of Sept. 30, 2023.
Goldman’s Capital Distribution Update
During the reported quarter, Goldman returned $1.98 billion of capital to common shareholders. This included $1 billion in share repurchases and common stock dividends of $978 million.
2024 Outlook
The company expects the tax rate to be around 22%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Goldman has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Goldman has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.