Goldman Sachs: Q1 earnings

Summary of Goldman Sach's earnings for its first quarter, following which shares went up 1.8% in the pre-market trading (12.45pm).

 

Revenue

Earnings per share

Expected

$8.664 billion $3.49

Actual

$8.357 billion $4.02

 

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Goldman Sachs, everyone’s favourite investment bank, was able to post results that were ahead of estimates, giving the stock another lift in a week when it had already gained 3%.

Bank earnings did not start well, with JPMorgan failing to live up to forecasts, but Goldman Sachs has proven its strength once again. It made $4.02 per share in the first quarter, on revenue of $8.357 billion.

Expenses fell, but trading activity slumped; a feature common to investment banks this season. The more difficult regulatory environment with banks is making life more difficult for these titans, and the problems in emerging markets are not helping either.

Goldman Sachs shares have been the worst performer so far this year, down 9.7%. Over the past twelve months, only Citigroup has seen a lower return on its shares in capital growth terms (i.e. excluding dividends).

For the banking sector, concerns about emerging markets and Fed tapering/rate hikes are the primary worries for investors. These will mean that investors are more cautious. However, the growing US economy is always good for investment banks, which suggests a better outlook for the sector.

Goldman shares have held above $150 during the recent selloff, and this has given them the ability to bounce back towards $160. If we can hold above $160 in the coming days, $167.50 becomes a short-term target.

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