Earnings Preview | Underperforming the market, senior employees leaving frequently, Goldman Sachs faces severe challenges
Goldman Sachs is set to announce its first-quarter financial report on April 15th, with expected revenue of $12.89 billion, a year-on-year increase of 5.5%. Earnings per share are anticipated to be $8.66, a decrease of 1.5% compared to the previous year. The investment banking division of Goldman Sachs has performed well and is the top M&A bank this year. However, the stock price of Goldman Sachs has not been performing well, with only a 3.89% increase this year, lagging behind its competitors. Goldman Sachs plans to expand its private credit investment portfolio, aiming to increase its size to $300 billion
According to the VESYNC APP, Goldman Sachs (GS.US) will announce its first-quarter financial report before the US stock market opens on Monday, April 15th. According to Zacks, the market generally expects Goldman Sachs' Q1 revenue to be $12.89 billion, a year-on-year increase of 5.5%, with earnings per share of $8.66, a year-on-year decrease of 1.5%.
Another survey of 12 analysts shows that the average expectation for Goldman Sachs' first quarter revenue is $13 billion, with full-year revenue expected to reach $50.2 billion, higher than $45 billion in 2023.
There are signs that the company's investment banking division is improving. Data from Dealogic shows that Goldman Sachs is the best M&A bank this year, with deals worth $285 billion, higher than $142 billion in the same period last year.
Its equity capital market transactions have also increased from $11.2 billion in the same period of 2023 to $15.7 billion this year. Investment banking revenue is expected to increase from $1.31 billion in 2023 to $1.6 billion. The company also plans to expand its private credit investment portfolio to $300 billion.
In a report in March, CFRA upgraded Goldman Sachs to a "buy" rating, citing the company's budding recovery in financing and M&A activities.
Stock Price Lags Behind Peers
However, Goldman Sachs' stock performance has lagged behind competitors so far this year. The stock has only risen by 3.89% since the beginning of the year, compared to nearly 10% for the S&P 500 in 2024.
JPMorgan Chase (JPM.US) stock has surged by over 14.9% this year, while Citigroup (C.US) and Wells Fargo (WFC.US) have seen their stock prices rise by 17% and 15.68% respectively. Only Morgan Stanley (MS.US) has performed worse, with a sharp decline of 1.72%.
Over the past 12 months, Goldman Sachs' stock performance has also lagged behind the market. During this period, the stock has risen by 23.3%, while JPMorgan Chase has risen by over 52%, and Wells Fargo has risen by 47%.
Goldman Sachs' poor stock performance is attributed to weak investment banking business and challenges in its retail banking operations. In contrast, other banks have significant operations in consumer banking and wealth management.
Senior Employees Departure
Goldman Sachs has also lagged behind the market due to increased employee turnover. The most recent departure is Philip Berlinksi, who has been with Goldman Sachs for 24 years. He will now become the Chief Operating Officer of the $65 billion hedge fund Millennium Recently, Goldman Sachs also lost talent in investment banking and trading business director Jim Esposito.
In addition, it is widely expected that co-head of global financing group Beth Hammack will become the next Chief Financial Officer.
Goldman Sachs has already lost dozens of senior executives, including Paul Russo, Scott Rofey, and Jeffrey Verschleiser. Most of these departures occurred under the leadership of David Solomon, who has become a controversial leader of the company