Goldman Sachs Group Inc. (GS) delivered a strong third-quarter performance, exceeding both revenue and earnings expectations. The investment banking giant reported revenue of $12.70 billion, surpassing the consensus estimate of $11.87 billion, and earnings per share (EPS) of $8.40, outpacing the consensus forecast of $7.03. These impressive results reflect robust client demand and a growing backlog of deals, indicating a positive outlook for the company.
During the earnings conference call, Goldman Sachs CEO David Solomon highlighted the strong performance, emphasizing the firm’s focus on core businesses and its commitment to enhancing margins in asset and wealth management. Solomon also noted that alternative fundraising is expected to exceed $60 billion in 2024. While the firm’s equity and M&A volumes remain below 10-year averages, Solomon stressed the need to maintain a strong focus on profitability.
J.P. Morgan analyst Kian Abouhossein, who maintains an Overweight rating on GS shares, expressed optimism about the results, highlighting their strength compared to the cautious guidance provided at the recent September Financials conference. Abouhossein particularly praised Equity S&T revenues, which reached $3.5 billion, significantly surpassing those reported by peers. He attributed this performance to a substantial ongoing margin.
Based on these strong results and the continued strength in core franchises, Abouhossein anticipates that Goldman Sachs shares will outperform its peers. The analyst forecasts low single-digit percentage upgrades to the consensus EPS estimates for 2024.
For investors seeking exposure to Goldman Sachs, two ETFs provide potential avenues: Shares U.S. Broker-Dealers & Securities Exchanges ETF (IAI) and Global X Funds Global X Dow 30 Covered Call ETF (DJIA).
Despite the positive earnings report, GS shares closed down 0.55% at $519.90 on Tuesday. This slight decline may be attributed to broader market sentiment or investor caution despite the strong results.
Goldman Sachs’ robust earnings performance, combined with the positive outlook from J.P. Morgan’s analyst, suggests a promising future for the company. The firm’s focus on core businesses and its commitment to margin enhancement indicate a strategic approach that could drive continued growth and outperformance.
