Goldman Sachs
This has led to strong rebounds in some of the most oversold and damaged sectors such as financials as Goldman is up 15% over the past week along with many of its peers. Its results were broadly in line with other banks which showed a sharp plummet in all sorts of financial activity like M&A or investment banking. The company was able to offset some of this weakness with strength in its trading operation.
Inside the Numbers
In Q2, Goldman Sachs reported $7.73 in EPS, beating expectations of $6.58 per share. Revenue also beat by an impressive margin at $11.86 billion vs. $10.86 billion. Overall, this was a 48% decline in profits, while revenues were down 23%.
The major factor in topping expectations was the fixed income division generating $700 million more in revenue than expected. This was due to more volatility and trading in rates, commodities, and currencies. Equities revenue also beat expectations and was up 11%.
Not surprisingly, investment banking revenue declined by 41% to $2.1 billion due to higher rates, lower asset prices, and a slowdown in new equity and debt issuance due to market conditions. This seems likely to continue given that many mergers and IPOs are being terminated rather than delayed.
The consumer and wealth management was in-line with expectations with a 25% increase to $2.2 billion. This was attributed to deposit growth, rising fees, and credit cards. This is consistent with other bank reports, however this makes up a much smaller portion of Goldman's overall business. The company also announced plans to slow hiring, an indication that it expects these adverse market conditions to persist.
In total, Goldman's shares are down 24% from their all-time high in November 2021. It's also off recent lows by 16% as it's participated in the market rebound. It remains one of the premier financial stocks as evidenced by its strong profits even during tough market conditions. It also remains quite cheap with a forward P/E of 8.4 and a 2.5% dividend yield.
