Goldman Sachs 1Q EPS $11.58 vs. $8.79 YoY, but Undershoots its Revenue Target

Goldman Sachs (GS) tonight, on April 15, 2023, reported Q1 earnings, exceeding analysts' expectations for earnings per share (EPS) but missing in terms of its revenue.

The Wall Street mogul reported EPS of $8.79, beating the consensus estimate of $8.10 by $0.69. However, the company's revenue of $12.22 billion fell short of the anticipated $12.79 billion by $570 million. Despite the revenue miss, Goldman Sachs’ annualized return on shareholders' equity (ROE) and annualized return on average tangible common shareholders' equity (ROTE) stood at 11.6% and 12.6%, respectively, posting a slight increase. Additionally, AUM rose by $125 billion to a record $2.67 trillion. Book value per common share also grew by 2.3% to $310.48.

Goldman's earnings performance was driven primarily by its trading and investment banking activities. Fixed income trading revenue declined by 17% to $3.93 billion, missing consensus estimate by $230 million. Equities trading revenue slipped by 7% to $3.02 billion, edging out the $2.9 billion estimate. However, investment banking revenue remained weak, falling by 26% on an annual basis to $1.58 billion.

1H 2023 marked a challenging period for the financial industry, with two lager American banks failing, but despite these headwinds, Goldman Sachs managed to top earnings expectations, albeit undershooting its revenue targets. Looking ahead, Goldman Sachs is expected to continue generating strong earnings, with analysts forecasting EPS of $33.62 for the current fiscal year. However, revenue growth may remain subdued, vis-à-vis high bases of Q1 2022 and 2021.