Global investment bank Goldman Sachs (GS – Free Goldman Sachs Stock Report) has reported better-than-expected first-quarter results. Share net came in at $6.95 for the March period, which was significantly ahead of our estimate of $4.50, as well as the $5.15 figure in the previous-year period. Meanwhile, revenues of $13.348 billion were up strongly on a year-over-year basis, and significantly outpaced our $10.500 billion estimate. The company saw year-over-year growth in all of its business segments.
The Institutional Client Services division was the biggest gainer in absolute terms, with revenues of $4.39 billion, rising 31% over the first quarter of 2017. Growth in the segment was led by a 38% spike in equities revenue, reflecting higher results in both derivatives and cash products, as well as larger commission and fee revenues due to higher market volumes. The unit also saw a 23% year-over-year rise in fixed income, currency, and commodities client execution revenues.
Meanwhile, the Investing & Lending division achieved the biggest year-over-year increase in percentage terms, rising 43% from the first quarter of 2017. This was driven by significantly higher net interest income, as well as net gains from private equities.
The company also announced that the board of directors raised the quarterly dividend, from $0.75 to $0.80, beginning with the payment scheduled for June 28th.
In light of Goldman's strong results, we have raised our revenues and share-net estimates for 2018 and 2019. Whereas we previously foresaw 2018 revenues of $45 billion, we now predict they will come in at $48 billion, and for 2019 we have raised our outlook to $49 billion, from $47 billion previously. Meanwhile, we have increased our earnings-per-share estimate for 2018 from $22.00 to $24.00, and for 2019 from $24.00 to $26.00.
About The Company:The Goldman Sachs Group is a global investment banking and securities firm. It operates in four business segments: Investment Banking (21% of 2016 revenues); Institutional Client Services (47%); Investing & Lending (13%); and Investment Management (19%). In 2016, 40% of the company’s revenues came from outside of the Americas.
— Adam James Platt
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
