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Graham Griffin
Graham Griffin
Articles (168) 

Goldman Sachs Boasts Strong Earnings for the 4th Quarter

Revenues far surpass analyst estimates

January 19, 2021 | About:

Leading global investment bank Goldman Sachs Group Inc. (NYSE:GS) released stellar fourth-quarter results on Tuesday morning.

The group reported earnings per share of $12.08, which sailed past Refinitiv analysts' estimates of $7.47 per share. Revenue of $11.74 billion also jumped ahead of estimates by $1.75 billion and surpassed 2019 totals by 18%.

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Goldman Sachs' significant jump in net revenue came from both the underwriting and financial advisory aspects of the business. Underwriting specifically saw benefits from higher net revenues coming from equity-based underwriting that reflects higher industry-wide activity. These revenues were partially offset by lower net revenues in debt underwriting according to the company's press release.

The asset management team saw revenue of $3.21 billion for the fourth quarter, representing a 7% increase over the year-ago quarter. An increase in lending and debt investment revenues was attributed to higher net gains due to tighter corporate credit spreads throughout the quarter. However, a decrease in equity investments was credited toward significantly lower net gains from investments in private equities.

Consumer and wealth management brought in $347 million and $1.31 billion in net revenue respectively. The consumer banking numbers exceeded year-ago quarter values by 52% thanks to higher deposit and credit card loan balances. Wealth management revenues benefited from higher average assets under supervision and higher transaction volumes.

"It was a challenging year on many fronts, and I am deeply proud of how our people helped clients respond to the economic disruption brought on by the pandemic and the extreme market volatility experienced over the past months," Chairman and CEO David Solomon said. "Our people responded admirably to a series of professional and personal challenges, while working from home or in offices that were reshaped dramatically. Thanks to their perseverance, we were able to help clients navigate a difficult environment, and, as a result, achieved strong results across the franchise, while advancing our strategic priorities."

On Jan. 15, the board of directors declared a dividend of $1.25 per common share to be paid in March of this year.

As of Jan. 19, the stock was trading at $296.05 per share with a market cap of $101.63 billion. According to the GF Value Line, the stock is trading at a fair value.

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Top gurus invested in Goldman Sachs include Yacktman Asset Management (Trades, Portfolio), Spiros Segalas (Trades, Portfolio), Richard Pzena (Trades, Portfolio), Donald Smith (Trades, Portfolio) and Mario Gabelli (Trades, Portfolio).

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Dislcosure: Author owns no stocks mentioned.

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