Are Goldman Sachs Earnings Signaling a Recovery?

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When Goldman Sachs Group Inc. (NYSE: GS) released its fourth-quarter earnings report before the markets opened on Wednesday, the investment house said that it had $6.04 in earnings per share (EPS) and $8.08 billion in revenue. That compares with consensus estimates of $5.61 in EPS and revenue of $7.78 billion, as well as the $5.68 per share and $7.83 billion posted in the same period of last year.

During this latest quarter, provisions for credit losses totaled $222 million, compared with $290 million for the fourth quarter of 2017 and $174 million for the third quarter of 2018.

The Basel III Advanced common equity tier 1 ratio was 13.1% in this quarter, compared with 10.7% as of the same period last year and 12.4% in the third quarter of 2018.

The book value per common share was $207.36, and tangible book value per common share was $196.64.

In terms of its segments, the company reported as follows:

  • Investment Banking revenue totaled $2.04 billion, a decrease of 5% year over year.
  • Institutional Client Services revenue was $2.42 billion, an increase of 2%.
  • Investing and Lending revenue were last seen at $1.70 billion, an increase of 2%.

David Solomon, board chair and chief executive of Goldman Sachs, said:

We are pleased with our performance for the year, achieving stronger top and bottom line results despite a challenging backdrop for our market-making businesses in the second half. For the year, we delivered double-digit revenue growth, the highest earnings per share in the firm’s history and the strongest return on equity since 2009. We are confident that we are well positioned to support an even larger universe of clients, continue to diversify our revenue mix and deliver strong returns for our shareholders in the years ahead.

Shares of Goldman Sachs were last seen up about 8% at $194.21, with a consensus analyst price target of $231.35. The 52-week trading range is $151.70 to $275.31.