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Why Is Goldman (GS) Down 2.2% 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 lost about 2.2% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Goldman due for a breakout? 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 second-quarter 2024 earnings per share of $8.62 surpassed the Zacks Consensus Estimate of $8.52. This compares favorably with the $3.08 reported in the year-earlier quarter.
Goldman’s results have benefited from the strength in Fixed Income, Currency and Commodities Client Execution (FICC) financing revenues, and investment banking (IB). Further, a decline in expenses and provisions acted as a tailwind.
Net earnings of $3.04 billion increased significantly from $1.22 billion in the prior year quarter.
Revenues Increase and Expenses Fall
Net revenues for the quarter of $12.73 billion increased 16.9% from the year-ago quarter. Also, the top line surpassed the Zacks Consensus Estimate of $12.6 billion.
Total operating expenses decreased marginally year over year to $8.53 billion.
Provision for credit losses was $282 million, plunging 54.1% year over year.
Quarterly Segmental Performance Improves
The Asset & Wealth Management division generated revenues of $3.88 billion in the reported quarter, up 27.3% year over year. The improvement was driven by higher management and incentive fees, equity investments, and higher net revenues in Debt investments, which was partially offset by lower net revenues in Private banking and lending.
Firmwide assets under supervision were a record $2.93 trillion, up 8.1% from the prior-year quarter.
The Global Banking & Markets division has recorded revenues of $8.18 billion, which increased 13.8% year over year. The improvement was due to an increase in the IB business (up 21.1%), higher revenues in FICC (up 17.3%), along with a rise in equities revenues (up 6.8%).
The Platform Solutions division’s revenues were $669 million, up 1.5% year over year. The rise was driven by higher revenues from consumer platforms.
Capital Ratios Improves
As of Jun 30, 2024, the standardized Common Equity Tier 1 capital ratio was 14.8%, up 14.6% on a sequential basis. The company’s supplementary leverage ratio was 5.4%, which remained unchanged from the previous quarter.
Capital Distribution Update
During the reported quarter, Goldman returned $4.43 billion of capital to common shareholders. This included $3.50 billion in share repurchases and common stock dividends of $929 million.
2024 Outlook
The company expects the tax rate to be around 22%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
Currently, Goldman has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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 looks promising. 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) Down 2.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Goldman Sachs (GS - Free Report) . Shares have lost about 2.2% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Goldman due for a breakout? 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 Q2 Earnings Beat Estimates, IB Revenues Rise Y/Y
Goldman's second-quarter 2024 earnings per share of $8.62 surpassed the Zacks Consensus Estimate of $8.52. This compares favorably with the $3.08 reported in the year-earlier quarter.
Goldman’s results have benefited from the strength in Fixed Income, Currency and Commodities Client Execution (FICC) financing revenues, and investment banking (IB). Further, a decline in expenses and provisions acted as a tailwind.
Net earnings of $3.04 billion increased significantly from $1.22 billion in the prior year quarter.
Revenues Increase and Expenses Fall
Net revenues for the quarter of $12.73 billion increased 16.9% from the year-ago quarter. Also, the top line surpassed the Zacks Consensus Estimate of $12.6 billion.
Total operating expenses decreased marginally year over year to $8.53 billion.
Provision for credit losses was $282 million, plunging 54.1% year over year.
Quarterly Segmental Performance Improves
The Asset & Wealth Management division generated revenues of $3.88 billion in the reported quarter, up 27.3% year over year. The improvement was driven by higher management and incentive fees, equity investments, and higher net revenues in Debt investments, which was partially offset by lower net revenues in Private banking and lending.
Firmwide assets under supervision were a record $2.93 trillion, up 8.1% from the prior-year quarter.
The Global Banking & Markets division has recorded revenues of $8.18 billion, which increased 13.8% year over year. The improvement was due to an increase in the IB business (up 21.1%), higher revenues in FICC (up 17.3%), along with a rise in equities revenues (up 6.8%).
The Platform Solutions division’s revenues were $669 million, up 1.5% year over year. The rise was driven by higher revenues from consumer platforms.
Capital Ratios Improves
As of Jun 30, 2024, the standardized Common Equity Tier 1 capital ratio was 14.8%, up 14.6% on a sequential basis. The company’s supplementary leverage ratio was 5.4%, which remained unchanged from the previous quarter.
Capital Distribution Update
During the reported quarter, Goldman returned $4.43 billion of capital to common shareholders. This included $3.50 billion in share repurchases and common stock dividends of $929 million.
2024 Outlook
The company expects the tax rate to be around 22%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
Currently, Goldman has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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 looks promising. Notably, Goldman has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.