Goldman Sachs Earnings Boosted by Volatility, Lower Taxes

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Goldman Sachs Group Inc. (NYSE: GS) reported first-quarter 2018 results before markets opened Tuesday. The investment bank reported diluted earnings per share (EPS) of $6.95 on revenue of $10.04 billion. In the same period a year ago, the bank reported EPS of $5.15 on revenue of $8.03 billion. First-quarter results also compare to the consensus estimates for EPS of $5.58 on revenue of $8.74 billion.

Book value per common share increased by 3.2% during the year to $186.73, and annualized return on equity was 15.4%, the highest level in more than five years.

Revenues were higher in all four of the bank’s business lines. Fixed income revenues rose 23% due to improved market-making conditions and higher trading activity (volatility).

The firm’s effective tax rate tumbled from 61.5% for all of 2017 to 17.2% and net income rose from $2.16 billion in the year-ago quarter to $2.74 billion.

CEO Lloyd Blankfein said:

Solid performance across our businesses produced strong returns in the first quarter. We are well positioned to serve our clients as the global economy continues to show strength and central banks unwind certain aspects of policy stimulus. We are also broadening our client base and further diversifying our businesses to drive more revenue and earnings growth for the firm.

The bank did not offer guidance in its press release, but the consensus estimates call for second-quarter EPS of $4.56 on revenues of $8.32 billion. The EPS estimate for the 2018 fiscal year is $21.80, on revenues of $33.35 billion.

Shares traded up about 1.4% $261.36 just after the opening bell. The 52-week trading range is $209.62 to $275.31. The consensus 12-month price target was $271.96 before results were announced.

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