Goldman stock jumps after beating analyst expectations with strong bond trading results

David Solomon, CEO of Goldman Sachs & Co., speaks during a Bloomberg Television interview at the Milken Institute Global Conference in Beverly Hills, California, U.S., on Monday, April 29, 2019.

Patrick T. Fallon | Bloomberg | Getty Images

Goldman Sachs On Tuesday, it announced third-quarter results that beat analyst expectations for earnings and returns on better-than-expected trading results.

Here are the numbers:

  • Earnings: $8.25 per share. For $7.69 per share, according to Refinitiv
  • Revenue: $11.98 billion, versus $11.41 billion estimated

The company said earnings fell 43% to $3.07 billion, or $8.25 per share, topping analysts’ estimates polled by Refinitiv of $7.69. Revenue fell 12% to $11.98 billion, beating estimates by more than $500 million. Drops in Goldman’s earnings and revenue were expected after last year’s IPO boom calmed this year.

The bank’s shares rose 2.9% in pre-market trading.

David Solomon, Goldman’s CEO, said the results show the company’s “strength, breadth and diversity” and formally announced the company’s reorganization reported earlier this week.

“Today we are entering the next phase of our growth, introducing a reorganization of our business that will enable us to further leverage One Goldman Sachs’ dominant operating model,” Solomon said. “We are confident that our strategic development will deliver higher and more lasting returns and unlock long-term value for shareholders.”

Goldman’s fixed-income traders generated $3.53 billion in revenue, a 41% increase from the same period last year and about $500 million more than analysts expected, as they benefited from increased client activity in bonds and currencies amid volatile markets.

Equity traders brought in $2.68 billion in revenue, down 14% from the previous year that beat estimates of $2.59 billion.

Strong trading results offset the failure of investment banking, as revenue fell 57% to $1.58 billion, below analysts’ estimates of $1.84 billion.

The results were in line with Goldman’s competitors in the quarter. While competitors including c. B. Morgan Chase And the Morgan Stanley They reported a sharp drop in investment banking revenue for the third quarter, and better-than-expected fixed income results amid volatile markets helped support their corporate businesses.

The question is how long the bank’s consumer business will continue to lose money, a sore topic among investors due to its impact on the company during the stock’s decline.

The company’s reorganization will combine the bank’s four main divisions into three, according to people familiar with the plan. People said the move splits Goldman’s consumer operations and splits the parts into two new divisions.

Goldman’s shares trade for the lowest price to tangible book value ratio among the six largest US banks excluding Citigroup, a situation that Solomon certainly wants to address.

The bank’s shares are down nearly 20% this year through Monday, compared to the KBW Bank’s 26% decline.

Last week, JPMorgan and Wells Fargo beat expectations for third-quarter earnings and revenue by generating better-than-expected interest income. City Group It also beat analyst estimates, and Morgan Stanley missed as volatile markets affected the investment management business.

This story is developing. . Please check back for updates

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