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Goldman (GS) Up 0.2% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Goldman Sachs (GS - Free Report) . Shares have added about 0.2% in that time frame, underperforming 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 drivers.
Goldman’s fourth-quarter 2023 earnings per share of $5.48 surpassed the Zacks Consensus Estimate of $3.47. Also, the bottom line increased 65% from the year-earlier quarter.
Goldman’s results have been supported by strength in the consumer banking business, while FICC revenues declined.
Net earnings of $2 billion rose 51% from the prior-year quarter.
For 2023, the company reported net earnings of $8.25 billion, plunging 24% year over year.
Revenues Increase, Expenses Rise
Net revenues of $11.32 billion for the quarter increased 7% from the year-ago quarter. Also, the top line surpassed the Zacks Consensus Estimate of $10.71 billion.
Net revenues of $46.25 billion for 2023 dipped 2% from the year-ago quarter. Nonetheless, the top line surpassed the consensus estimate of $45.6 billion.
Total operating expenses increased 5% year over year to $8.48 billion. Higher depreciation and amortization, and other expenses led to the increase.
Provision for credit losses was $577 million, down 41% from the year-ago quarter.
Quarterly Segmental Performance Mixed
The Asset & Wealth Management division generated revenues of $4.38 billion in the reported quarter, up 23% year over year. Results reflect higher fees from equity investments and incentive fees, offset by higher private banking and lending.
Firmwide assets under supervision were a record $2.81 trillion, up from $2.68 trillion in the prior quarter.
The Global Banking & Markets division has recorded revenues of $6.35 billion, down 3% year over year. The fall indicated a decline in the investment banking business (down 12%) and lower net revenues in FICC (down 24%), offset by higher equities revenues (up 26%).
The Platform Solutions division’s revenues were $577 million, rising 12% year over year. The jump was driven by significantly higher revenues from consumer platforms.
Capital Ratios Deteriorate
As of Dec 31, 2023, the standardized Common Equity Tier 1 capital ratio was 14.5%, down from the prior-year quarter’s 15%. The company’s supplementary leverage ratio was 5.5%, down from the prior-year quarter’s 5.8%.
Capital Distribution Update
In 2023, Goldman returned $9.39 billion of capital to common shareholders. This included $5.80 million in share repurchases and common stock dividends of $3.59 billion.
2024 Outlook
The company expects tax rate to be within the 22-23% band.
Medium-Term Targets
The company expected to achieve gross inflows of $225 billion for alternative investments from 2020 through 2024 end. It succeeded in achieving this target a year earlier.
Goldman expects to achieve more than $10 billion in firmwide management and other fees in 2024. Of this, more than $2 billion in alternative management fees are expected.
In its efforts to reduce balance sheet density, the company intends to reduce the historical principal investment portfolio by less than $15 billion by 2024 and completely exit the portfolio within the next three to five years.
Through the cycle, Goldman targets a ROE of 14-16%, a return on average tangible common shareholders’ equity (ROTE) of 15-17% and an efficiency ratio of 60%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
At this time, Goldman has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
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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Goldman (GS) Up 0.2% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Goldman Sachs (GS - Free Report) . Shares have added about 0.2% in that time frame, underperforming 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 drivers.
Goldman Q4 Earnings Beat Estimates, Revenues Rise Y/Y
Goldman’s fourth-quarter 2023 earnings per share of $5.48 surpassed the Zacks Consensus Estimate of $3.47. Also, the bottom line increased 65% from the year-earlier quarter.
Goldman’s results have been supported by strength in the consumer banking business, while FICC revenues declined.
Net earnings of $2 billion rose 51% from the prior-year quarter.
For 2023, the company reported net earnings of $8.25 billion, plunging 24% year over year.
Revenues Increase, Expenses Rise
Net revenues of $11.32 billion for the quarter increased 7% from the year-ago quarter. Also, the top line surpassed the Zacks Consensus Estimate of $10.71 billion.
Net revenues of $46.25 billion for 2023 dipped 2% from the year-ago quarter. Nonetheless, the top line surpassed the consensus estimate of $45.6 billion.
Total operating expenses increased 5% year over year to $8.48 billion. Higher depreciation and amortization, and other expenses led to the increase.
Provision for credit losses was $577 million, down 41% from the year-ago quarter.
Quarterly Segmental Performance Mixed
The Asset & Wealth Management division generated revenues of $4.38 billion in the reported quarter, up 23% year over year. Results reflect higher fees from equity investments and incentive fees, offset by higher private banking and lending.
Firmwide assets under supervision were a record $2.81 trillion, up from $2.68 trillion in the prior quarter.
The Global Banking & Markets division has recorded revenues of $6.35 billion, down 3% year over year. The fall indicated a decline in the investment banking business (down 12%) and lower net revenues in FICC (down 24%), offset by higher equities revenues (up 26%).
The Platform Solutions division’s revenues were $577 million, rising 12% year over year. The jump was driven by significantly higher revenues from consumer platforms.
Capital Ratios Deteriorate
As of Dec 31, 2023, the standardized Common Equity Tier 1 capital ratio was 14.5%, down from the prior-year quarter’s 15%. The company’s supplementary leverage ratio was 5.5%, down from the prior-year quarter’s 5.8%.
Capital Distribution Update
In 2023, Goldman returned $9.39 billion of capital to common shareholders. This included $5.80 million in share repurchases and common stock dividends of $3.59 billion.
2024 Outlook
The company expects tax rate to be within the 22-23% band.
Medium-Term Targets
The company expected to achieve gross inflows of $225 billion for alternative investments from 2020 through 2024 end. It succeeded in achieving this target a year earlier.
Goldman expects to achieve more than $10 billion in firmwide management and other fees in 2024. Of this, more than $2 billion in alternative management fees are expected.
In its efforts to reduce balance sheet density, the company intends to reduce the historical principal investment portfolio by less than $15 billion by 2024 and completely exit the portfolio within the next three to five years.
Through the cycle, Goldman targets a ROE of 14-16%, a return on average tangible common shareholders’ equity (ROTE) of 15-17% and an efficiency ratio of 60%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
At this time, Goldman has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Goldman has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.