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Category: Stock Market and Goldman Sachs
Date: 16 April 2020 Stock Price: $178.52 We take a look at the 1st quarter earnings report of their 2020 fiscal year of Goldman Sachs, a financial services provider with $1.8 trillion in assets under management as at end of March 2020
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About Goldman Sachs
The Goldman Sachs Group, Inc. is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in all major financial centers around the world.
Overview of Goldman Sachs' 1st quarter 2020 earnings report
Data below refers to quarterly data unless specified otherwise:
- Revenue: $8.743 billion (down from $8.807billion for the same period of the previous year)
- Revenues decreased by -1% over the last 12 months
- Total operating expenses: $6.458 billion (up from $5.864 billion for the same period of the previous year)
- Operating costs and expenses increased by 10% over the last 12 months
- Some margin squeeze on Goldman Sachs as their revenues declined while their non interest expenses increased
- Net income: $1.123 billion (down from $2.182 billion for the same period of the previous year)
- Net income decreased by -49% over the last 12 months
- Diluted earnings per share: $3.11 (down from $5.71 for the same period of the previous year)
- PE ratio of Goldman Sachs: $0.90
- Dividend declared for the quarter: $1.25
- Dividend yield: 2.79%
- Diluted weighted-average shares outstanding: 361.6 million (down from 382.4 million for the same period of the previous year)
- Book value per share: $228.21
- Loans net of allowances for losses: $128 billion
- Loans net of allowances for losses 11.74% of Goldman Sachs total assets
- Stockholders equity in Goldman Sachs: $81.176 billion
- Stockholders equity per share: $224.86
- So Goldman Sachs is trading a 0.79 times its stockholders equity which is outside the expected range of between 2 and 4 which most firms tend to trade at.
- For perspective, the S&P 500 has a price to book ratio of 3.34. Read more about the S&P 500 here
Goldman Sachs management commentary on their 1st quarter 2020 earnings results
NEW YORK, April 15, 2020 – The Goldman Sachs Group, Inc. (NYSE: GS) today reported net revenues of $8.74 billion and net earnings of $1.21 billion for the first quarter ended March 31, 2020.
- During the quarter, the firm successfully executed on its Business Continuity Planning strategy amid the global COVID-19 pandemic, providing clients with advice, execution and liquidity. The firm generated $8.74 billion in quarterly net revenues during the first quarter of 2020, reflecting strength in franchise activity.
- The firm acted quickly by committing $500 million in capital to support small business lending in addition to $50 million in grants for COVID-19 relief efforts. The firm also donated more than 700,000 N95 masks and more than 2.5 million surgical masks to hospitals across the U.S. and Europe.
- As it relates to the firm’s businesses, Investment Banking generated quarterly net revenues of $2.18 billion, its second highest quarterly performance. The firm remained ranked #1 in worldwide announced and completed mergers and acquisitions for the year-to-date.
- Fixed Income, Currency and Commodities (FICC) generated quarterly net revenues of $2.97 billion, its highest quarterly performance in five years, reflecting strong client activity in both intermediation and financing.
- Equities generated quarterly net revenues of $2.19 billion, its second highest quarterly performance in five years, reflecting strength in derivatives and higher volumes in intermediation.
- Consumer & Wealth Management generated record quarterly net revenues of $1.49 billion, reflecting strength in both Consumer banking and Wealth management.
- The firm continued to scale the digital consumer deposit platforms, as consumer deposits increased by a record $12 billion in the first quarter of 2020 to $72 billion
- The firm maintained a highly liquid balance sheet, as global core liquid assets averaged $243 billion for the first quarter of 2020
Goldman Sachs (NYSE: GS) stock price history
The image below, obtained from Google, shows the stock price history Goldman Sachs over the last 5 years. And it's not been a very good time for Goldman Sachs stockholders. 5 years ago the stock was trading at around $194.90 a stock and its currently trading at $178.52 a stock. That's a loss of -8.4% suffered by Goldman Sachs stockholders over the last 5 years.
The stock of Goldman Sachs is trading at closer to its 52 week low of $130.85 than it is to its 52 week high of $250.46 which to us is an indication that the momentum and sentiment of Goldman Sachs is negative at this point in time. We are not surprised at most listed stock's sentiment is pretty negative at this point in time following the massive market sell off triggered by the impact of the Coronavirus (Covid-19) on global economic growth.
The stock of Goldman Sachs is trading at closer to its 52 week low of $130.85 than it is to its 52 week high of $250.46 which to us is an indication that the momentum and sentiment of Goldman Sachs is negative at this point in time. We are not surprised at most listed stock's sentiment is pretty negative at this point in time following the massive market sell off triggered by the impact of the Coronavirus (Covid-19) on global economic growth.
Recent coverage of Goldman Sachs
The extract below discusses the latest regarding Goldman Sachs as obtained from TheStreet.com
Goldman Sachs Group (GS) posted weaker-than-expected first quarter earnings Wednesday but noted solid gains in revenues from its trading division and a record increase in customer deposits. Goldman's net credit loss provision for the quarter, however, was $937 million, a more than three-fold increase from the first quarter of last year "as a result of continued pressure in the energy sector and the impact of COVID-19 on the broader economic environment," the bank said.
Goldman Sachs said earnings for the three months ending in March were pegged at $3.11 per share, down 46% from the same period last year and well shy of the Street consensus forecast of $3.35 per share. Net revenues of $8.74 billion were modestly lower from last year but topped analysts' estimates of a $6.75 billion tally. The revenue beat was boosted by solid gains in fixed income and commodities trading, where revenues rose 33% to $2.97 billion, Global markets revenues, in fact, jumped 28% from last year to $5.16 billion and customer deposits rose by a record $12 billion, Goldman said.
Read the full article here
Goldman Sachs Group (GS) posted weaker-than-expected first quarter earnings Wednesday but noted solid gains in revenues from its trading division and a record increase in customer deposits. Goldman's net credit loss provision for the quarter, however, was $937 million, a more than three-fold increase from the first quarter of last year "as a result of continued pressure in the energy sector and the impact of COVID-19 on the broader economic environment," the bank said.
Goldman Sachs said earnings for the three months ending in March were pegged at $3.11 per share, down 46% from the same period last year and well shy of the Street consensus forecast of $3.35 per share. Net revenues of $8.74 billion were modestly lower from last year but topped analysts' estimates of a $6.75 billion tally. The revenue beat was boosted by solid gains in fixed income and commodities trading, where revenues rose 33% to $2.97 billion, Global markets revenues, in fact, jumped 28% from last year to $5.16 billion and customer deposits rose by a record $12 billion, Goldman said.
Read the full article here
Goldman Sachs (NYSE: GS) latest stock valuation
So what is JP Morgan Chase stock worth based on the release of their latest earnings report? Based on JP Morgan Chase latest earnings report our valuation models provide a target (full value) price for JP Morgan Chase stock at $141.20 a stock (down slightly from our 4th quarter 2019 earnings report valuation of JP Morgan Chase). We therefore believe that the stock of JP Morgan Chase is undervalued at its current price of around $91. The sharp sell off in world markets and JP Morgan's stock price has provided investors with a good long term buying opportunity.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $141.20 Therefore we believe a good entry point into JP Morgan Chase's stock is at $127.10 or below.
We expect the stock of JP Morgan Chase to surge once world economies starts reopening after the Covid-19 pandemic eases.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $141.20 Therefore we believe a good entry point into JP Morgan Chase's stock is at $127.10 or below.
We expect the stock of JP Morgan Chase to surge once world economies starts reopening after the Covid-19 pandemic eases.
Next earnings release date for Goldman Sachs
It is expected that Goldman Sachs (NYSE: GS) 2nd quarter 2020 earnings report will be released in the middle of July 2020