Goldman Sachs Crushes Earnings Estimates

This comes via Bloomberg:

Goldman Sachs Group Inc.’s (GS) second- quarter profit exceeded analysts’ estimates as record trading and stock underwriting led the company to its highest quarterly profit.

Net income in the three months ended June 26 was $3.44 billion, or $4.93 a share, the New York-based bank said today in a statement. That surpassed the $3.65 per-share average estimate of 22 analysts surveyed by Bloomberg and compared with $2.09 billion, or $4.58 per share, in last year’s second quarter.

This number includes a charge that if excluded would put us up well into the $5 per share range – very much in line with Meredith Whitney’s bullish call. Here’s what the Wall Street journal said.

Goldman posted income of $3.44 billion, or $4.93 a share, up from $2.09 billion, or $4.58 a share, a year earlier. The latest results included a $426 million dividend related to the company’s paying back its TARP funds. Excluding that, earnings were $5.71 a share. Net revenue jumped 46% to $13.76 billion.

The stock was down $2 in pre-market trading at 830AM ET. MarketWatch also notes a huge uptick in revenue.

Net revenues at the firm were $13.76 billion in the second quarter, compared to $9.42 billion last year. Goldman switched from a fiscal reporting schedule to a calendar schedule last year, and this year’s second quarter ended in June, while the year ago data is for the period ended May 31, 2008.

The Goldman press release is here. What I find notable is the order in which the press release presents the earnings, with a statement on the advisory business first, followed by equities and then fixed income even though fixed income was where the most revenue and profit came. That is revealing – and shows Goldman execs still consider the advisory business of relatively more importance from a reputational perspective.

Comments

[fatseal:]

So they're gonna pay all that TARP money back pronto, right?

Can I have a huge infusion of TARP money so I can go from bankrupt to kickin it in record time? I'm just saying...

Jul 14 12:59 PM

[Drew Arnold:]

It's been paid.


On Jul 14 12:59 PM fatseal wrote:

> So they're gonna pay all that TARP money back pronto, right? <br/>
>
> Can I have a huge infusion of TARP money so I can go from bankrupt
> to kickin it in record time? I'm just saying...

Jul 14 03:00 PM

[a fat panda:]

Including the AIG counter-party risk that was absorbed by the taxpayer? Saying it has been paid is laughable.

What is also laughable is talking about the earnings X TARP dividends. It is as though the author thinks that this money should have been free.

On Jul 14 03:00 PM Drew Arnold wrote:

> It's been paid.

Jul 14 06:06 PM

[Kentpaul:]

it wasnt free the tarp money came with unlimited zero interest rate financing

Jul 14 06:43 PM

[RMUMM:]

If not for the AIG Paulson bailout they would be out of business, what thiefs, they write the worthless paper sell it, take billions in profit and bonus, then get AIG to insure the worthless paper, and Paulson to the rescue with an AIG taxpaper bailout...

Jul 14 10:27 PM

[Ricard:]

Are these earnings legitimate? I ask because companies like Citigroup have been coming out with their own 'stellar' earnings in the past couple of months.

It seems GS has a white-knight reputation amongst its shareholders, but it does seem a little odd that it is doing so well while other publicly traded firms flounder or die off outright. That and the news surrounding its program trading scandal do add an air of...ill-repute.

Jul 14 11:58 PM

[Marco Hickey:]

I believe all the banks will blow away numbers, this due to the relaxed accounting rules.


On Jul 14 11:58 PM Ricard wrote:

> Are these earnings legitimate? I ask because companies like Citigroup
> have been coming out with their own 'stellar' earnings in the past
> couple of months.
>
> It seems GS has a white-knight reputation amongst its shareholders,
> but it does seem a little odd that it is doing so well while other
> publicly traded firms flounder or die off outright. That and the
> news surrounding its program trading scandal do add an air of...ill-repute.

Jul 15 12:17 AM

[Mad Hedge F...:]

Good for Goldman. When I turned on my computer this morning and saw the S&P 500 futures up 40 from yesterday’s low, I knew it was time to fix the flat on my kid’s bicycle, trim the hedges, repair the torn screen window, and unclog the downstairs toilet. The worst thing you can do in these low volume, summer short covering rallies is sell too soon. Kudos to Goldman Sachs for bringing in a blowout quarter, which I had long expected. When junk yields move from 25% to 13% how hard is it to make money? It just shows you what a great business model they have, that of a “portfolio” of traders, some of which are making money at all times. But what is great for GS is not so good for the rest of us. Much or their future will rely on the vast expansion of public debt from every quarter, from 30 year Treasuries to your local sewer works, all of which has to be traded where they have the Ax. The remaining financials and the economy as a whole are no Goldman Sachs. So you have to view the rally they sparked as a gift to sell into. There are no green shoots in the US, and only a few in Asia, as the Shanghai market’s doubling since November has been shouting at us at the top of its lungs. Call them bamboo shoots. Look at the chart below prepared by Price Headly at Big Trends at www.bigtrends.com/inde..., showing that we are still safely and solidly in a downtrend. Still, keep some buy stops up above as insurance, just in case traders really want to go nuts and squeeze the index above 930.

Jul 15 12:30 AM

[Vienna:]

The US is corrupt to the highest degree.

Jul 15 04:07 AM