Global investment bank Goldman Sachs (GS – Free Goldman Stock Report) has reported solid third-quarter results. Share net came in at $6.28 for the September period, which was ahead of our estimate of $6.00, as well as the $5.02 figure in the previous-year period. Meanwhile, revenues of $12.851 billion missed our $13 billion estimate by a small margin, but were up substantially from the $11.007 billion figure in the same period last year.
The Investment Banking segment was the biggest gainer in absolute terms, with revenue growth driven by an increase in initial public offering activity. This was partly offset by lower debt underwriting revenues.
Meanwhile, the Investment Management segment achieved the biggest year-over-year increase in percentage terms, rising 12% from the third quarter of 2017. This was primarily due to higher management fees, reflecting higher average assets under supervision.
In light of Goldman's solid results, we have raised our share-net estimate for 2018 from $25.00 to $25.50. However, we have left our 2018 revenue estimate unchanged, as well as our revenue and earnings-per-share estimates for 2019.
The company recently replaced longtime Chairman and CEO Lloyd Blankfein with its President and COO David M. Solomon. The new leader has taken over at a bright time for the firm, with record breaking year-to-date earnings per share and the highest return on equity it has seen in nine years. Furthermore, the investment bank is reaping the benefits of the recent reduction in the U.S. corporate tax rate.
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
