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Category: Stock Market and Goldman Sachs (GS)
Date: 14 October 2020 Stock Price of Goldman Sachs (GS): $212.10 We take a look at the 3rd quarter earnings report of their 2020 fiscal year of Goldman Sachs, a financial services provider with $2.036 trillion in assets under management as at end of September 202. The group reported net income of $3.484 billion for the 3rd quarter of their 2020 fiscal year.
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Our ability to serve clients who are navigating a very uncertain environment drove strong performance across the franchise, building off a strong first half of the year. As our clients begin to emerge from the tough economy brought on by the pandemic, we are well positioned to help them recover and grow, particularly given market share gains we’ve achieved this year-David M. Solomon, Chairman and Chief Executive Officer "
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' 3rd quarter 2020 earnings report
Data below refers to quarterly data unless specified otherwise:
- Revenue: $10.781 billion (down from $8.323 billion for the same period of the previous year)
- Revenues decreased by 30% over the last 12 months
- Total operating expenses: $5.954 billion (up from $5.616 billion for the same period of the previous year)
- Operating costs and expenses increased by 6% over the last 12 months
- Some margin gains on Goldman Sachs as their revenues increased at a lot faster than their operating expenses
- Net income: $3.484 billion (up from $2.182 billion for the same period of the previous year)
- Net income increased by 94% over the last 12 months
- Diluted earnings per share: $9.68 (down from $4.79 for the same period of the previous year)
- PE ratio of Goldman Sachs: 9.8
- Diluted weighted-average shares outstanding: 359.9 million (down from 374.4 million for the same period of the previous year)
- Book value per share: $356
- Loans net of allowances for losses: $112 billion
- Loans net of allowances for losses 9.8% of Goldman Sachs total assets
- Stockholders equity in Goldman Sachs: $93 billion
- Stockholders equity per share: $258.4
- So Goldman Sachs is trading a 0.82 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 3.7.
Goldman Sachs management commentary on their 1st quarter 2020 earnings results
NEW YORK, October 14, 2020 – The Goldman Sachs Group, Inc. (NYSE: GS) today reported net revenues of $10.78 billion and net earnings of $3.62 billion for the third quarter ended September 30, 2020. Net revenues were $32.82 billion and net earnings were $5.20 billion for the first nine months of 2020. Diluted earnings per common share (EPS) was $9.68 for the third quarter of 2020 compared with $4.79 for the third quarter of 2019 and $0.53 for the second quarter of 2020, and was $13.34 for the first nine months of 2020 compared with $16.32 for the first nine months of 2019. Annualized return on average common shareholders’ equity (ROE)1 was 17.5% for the third quarter of 2020 and 8.0% for the first nine months of 2020. Annualized return on average tangible common shareholders’ equity (ROTE) 1 was 18.6% for the third quarter of 2020 and 8.5% for the first nine months of 2020. During the first nine months of 2020, the firm recorded net provisions for litigation and regulatory proceedings of $3.15 billion, which reduced diluted EPS by $8.77 and reduced annualized ROE by 5.1 percentage points.
"Our ability to serve clients who are navigating a very uncertain environment drove strong performance across the franchise, building off a strong first half of the year. As our clients begin to emerge from the tough economy brought on by the pandemic, we are well positioned to help them recover and grow, particularly given market share gains we’ve achieved this year.” -David M. Solomon, Chairman and Chief Executive Officer
"Our ability to serve clients who are navigating a very uncertain environment drove strong performance across the franchise, building off a strong first half of the year. As our clients begin to emerge from the tough economy brought on by the pandemic, we are well positioned to help them recover and grow, particularly given market share gains we’ve achieved this year.” -David M. Solomon, Chairman and Chief Executive Officer
- The firm’s quarterly results reflected strong net revenues of $10.78 billion, record quarterly diluted EPS of $9.68 and annualized ROE of 17.5%, the highest quarterly ROE since 2010.
- Investment Banking generated quarterly net revenues of $1.97 billion, including the second highest quarterly net revenues in Equity underwriting. The firm ranked #1 in worldwide announced and completed mergers and acquisitions, worldwide equity and equity-related offerings, common stock offerings and initial public offerings for the year-to-date.
- Global Markets generated quarterly net revenues of $4.55 billion, reflecting continued strength in Fixed Income, Currency and Commodities (FICC) and Equities.
- Asset Management generated quarterly net revenues of $2.77 billion, reflecting strong performance in Equity investments.
- Consumer & Wealth Management generated quarterly net revenues of $1.49 billion, reflecting record net revenues in Consumer banking and continued strength in Wealth management.
- The firm maintained a highly liquid balance sheet. In addition, the Standardized common equity tier 1 capital ratio increased 120 basis points during the quarter to 14.5%4.
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 high of $250.46 than it is to its 52 week low of $130.85 than which to us is an indication that the momentum and sentiment of Goldman Sachs is positive at this point in time.
The stock of Goldman Sachs is trading at closer to its 52 week high of $250.46 than it is to its 52 week low of $130.85 than which to us is an indication that the momentum and sentiment of Goldman Sachs is positive at this point in time.
Goldman Sachs (GS) vs Citigroup (C) vs JPMorgan Chase (JPM) stock over last 5 years
The image below shows the stock price performance of Goldman Sachs (GS) vs Citigroup (C) vs JPMorgan Chase (JPM) over the last 5 years. While all three are giants in the financial services industry their stock price trends and performance over the last 5 years have been vastly different. The summary below shows the stock price performance of the three firms over the last 5 years, sorted from best to worst performer
Recent coverage of Goldman Sachs
The extract below discusses the latest regarding Goldman Sachs as obtained from BusinessInsider.com
Goldman Sachs announced third-quarter earnings on Wednesday that trounced Wall Street's estimates and showed continued strength through the coronavirus pandemic.A $278 million buildup in loan-loss reserves over the period was offset by trading desks' outperformance and marked a sharp decline from the prior quarter's $1.6 billion sum. Profit more than doubled from the year-ago period and handily beat expectations. Revenue also came in above analysts' estimates. Goldman shares gained as much as 3% in early-Wednesday trading.
Here are the key numbers:
"As our clients begin to emerge from the tough economy brought on by the pandemic, we are well positioned to help them recover and grow, particularly given market share gains we've achieved this year," CEO David Solomon said in a statement.
Goldman sources more of its revenue from deal-advising and trading arms than other major Wall Street banks. Accordingly, the focus on trading aided the bank through the quarter as stocks endured volatility. Equities revenue hit $2.1 billion, up 10% from the third quarter of 2019, representing its second-highest quarterly revenue for equity underwriting.
Fixed-income sales and trading raked in $2.5 billion, up 49% from the year-ago period, as the Federal Reserve maintained its credit-market backstop. Investment-banking revenue reached $2 billion, up 7% from the year-ago period.
Goldman had a similarly rosy second-quarter report in July. The bank beat estimates for revenue and earnings, with revenue reaching its second-highest quarterly reading ever. The report also revealed Goldman's outperformance in the financial sector as the bank largely avoided the consumer-banking slowdown seen at other firms.
Wednesday marks the second day of bank earnings, after JPMorgan and Citigroup reported results Tuesday. Both banks beat revenue and profit estimates, with the former boasting a 32% leap in trading revenue. Both firms also shrank their credit-reserve builds from the previous quarter.
Bank of America earlier Wednesday reported third-quarter figures that missed analysts' expectations for revenue. Morgan Stanley is set to release its earnings report on Thursday morning. Goldman closed at $210.81 per share on Tuesday, down 8% year-t0-date.
Read the full article here
Goldman Sachs announced third-quarter earnings on Wednesday that trounced Wall Street's estimates and showed continued strength through the coronavirus pandemic.A $278 million buildup in loan-loss reserves over the period was offset by trading desks' outperformance and marked a sharp decline from the prior quarter's $1.6 billion sum. Profit more than doubled from the year-ago period and handily beat expectations. Revenue also came in above analysts' estimates. Goldman shares gained as much as 3% in early-Wednesday trading.
Here are the key numbers:
- Revenue: $10.78 billion, versus the $9.4 billion estimate from analysts surveyed by Bloomberg
- Earnings per share: $9.68, versus the $5.53 estimate
- Net income: $3.62 million, versus the $1.97 billion estimate
"As our clients begin to emerge from the tough economy brought on by the pandemic, we are well positioned to help them recover and grow, particularly given market share gains we've achieved this year," CEO David Solomon said in a statement.
Goldman sources more of its revenue from deal-advising and trading arms than other major Wall Street banks. Accordingly, the focus on trading aided the bank through the quarter as stocks endured volatility. Equities revenue hit $2.1 billion, up 10% from the third quarter of 2019, representing its second-highest quarterly revenue for equity underwriting.
Fixed-income sales and trading raked in $2.5 billion, up 49% from the year-ago period, as the Federal Reserve maintained its credit-market backstop. Investment-banking revenue reached $2 billion, up 7% from the year-ago period.
Goldman had a similarly rosy second-quarter report in July. The bank beat estimates for revenue and earnings, with revenue reaching its second-highest quarterly reading ever. The report also revealed Goldman's outperformance in the financial sector as the bank largely avoided the consumer-banking slowdown seen at other firms.
Wednesday marks the second day of bank earnings, after JPMorgan and Citigroup reported results Tuesday. Both banks beat revenue and profit estimates, with the former boasting a 32% leap in trading revenue. Both firms also shrank their credit-reserve builds from the previous quarter.
Bank of America earlier Wednesday reported third-quarter figures that missed analysts' expectations for revenue. Morgan Stanley is set to release its earnings report on Thursday morning. Goldman closed at $210.81 per share on Tuesday, down 8% year-t0-date.
Read the full article here
Goldman Sachs (NYSE: GS) latest stock valuation
So what is Goldman Sachs (GS) stock worth based on their latest earnings report? Based on the earnings reported our valuation model provides a target price for Goldman Sachs at $266 a stock. We therefore believe the stock of Goldman Sachs is undervalued at its current price.
We usually recommend that long term and fundamental investors look to enter a stock at least 10% below our target price, which is $266. We therefore recommend a good entry price into the stock of Goldman Sachs to be at $239.40 or below.
Since the stock of Goldman Sachs is trading at well below our suggested entry point into the stock we rate the stock of Goldman Sachs as a buy
We usually recommend that long term and fundamental investors look to enter a stock at least 10% below our target price, which is $266. We therefore recommend a good entry price into the stock of Goldman Sachs to be at $239.40 or below.
Since the stock of Goldman Sachs is trading at well below our suggested entry point into the stock we rate the stock of Goldman Sachs as a buy
Next earnings release date for Goldman Sachs
It is expected that Goldman Sachs (NYSE: GS) 4th quarter 2020 earnings report will be released in the middle of January 2021