June 25: GS bull flag confirms strong growth?
Current situation in the firm
Goldman delivered a standout Q1 2024, with earnings per share (EPS) hitting $11.58, substantially above the consensus estimate by 35.6%. The firm's revenues for the quarter reached $14.21 billion, marking a 16.3% increase year-over-year.
The company reached a record $2.8 trillion in assets under management (AUM) and a long-term net inflow of $24 billion.
The segment performance for Q1 2024 (the below numbers are a summary from their recent earnings call):
Global Banking & Markets:
Revenues: $9.7 billion
ROE: 18% on a fully allocated basis.
Advisory Revenues: $1 billion, driven by higher completed transactions. Goldman Sachs maintained its number one position in both announced and completed M&A league tables.
Equity Underwriting Revenues: $370 million, and Debt Underwriting Revenues: $699 million, both showing significant year-over-year increases due to higher industry volumes.
FICC Net Revenues: $4.3 billion, with strong performance in mortgages, credit, and currencies. Record FICC financing revenues of $852 million, primarily from better results in repo.
Equities Net Revenues: $3.3 billion, with equities intermediation revenues of $2 billion (up 14% year-over-year) and equities financing revenues of $1.3 billion.
Asset & Wealth Management:
Revenues: $3.8 billion, up 18% year-over-year.
Management and Other Fees: $2.5 billion, a 7% year-over-year increase.
Incentive Fees: $88 million, expected to reach $1 billion annually in the medium term, supported by $3.8 billion in unrecognized incentive fees.
Private Banking and Lending Revenues: $682 million, significantly higher due to the prior year's impact of the partial sale of the Marcus loan portfolio.
Equity and Debt Investments Revenues: $567 million, with improved performance in private portfolios.
Platform Solutions:
Revenues: $698 million.
Pre-tax Net Loss: $117 million, with expectations to reach pre-tax breakeven next year.
Key Financial Metrics
Market Cap: $145.2 billion
Dividend Yield: 2.4%
P/E Ratio (TTM): 17.6
P/E Ratio (Forward 1 Year): 12.5
Earnings Per Share (EPS) Growth (2023): 59.2%
Stock Price: $450.18 (June 2024)
Target Price: $518 (6-12 months projection)
Technical setup
A bull flag pattern is forming with a bullish breakout, indicating the continuation of the trend upward.
Since the local low, formed around the previous earnings the price saw a steep price trend to the upside, before taking a breather and forming the flag.
The Price-to-sales ratio currently sits well below the average which is another bullish signal since the ratio tends to navigate towards its average.
The Month-over-month returns have bottomed around the lower threshold and are ready for a bounce back.
The Wallstreet ratings are predominantly strong buy, giving it a max target price of $525 or +13% up from the current price.
Institutional ownership is rising according to the latest May fillings which is another positive catalyst for the price as it is generally good to follow the smart money.
Overall, my short-term expectations are bullish, driven by the price forming of a bull flag, strong fundamentals and business outlook, and bullish catalysts driven by Wall Street consensus and the smart money flows.
Goldman delivered a standout Q1 2024, with earnings per share (EPS) hitting $11.58, substantially above the consensus estimate by 35.6%. The firm's revenues for the quarter reached $14.21 billion, marking a 16.3% increase year-over-year.
The company reached a record $2.8 trillion in assets under management (AUM) and a long-term net inflow of $24 billion.
The segment performance for Q1 2024 (the below numbers are a summary from their recent earnings call):
Global Banking & Markets:
Revenues: $9.7 billion
ROE: 18% on a fully allocated basis.
Advisory Revenues: $1 billion, driven by higher completed transactions. Goldman Sachs maintained its number one position in both announced and completed M&A league tables.
Equity Underwriting Revenues: $370 million, and Debt Underwriting Revenues: $699 million, both showing significant year-over-year increases due to higher industry volumes.
FICC Net Revenues: $4.3 billion, with strong performance in mortgages, credit, and currencies. Record FICC financing revenues of $852 million, primarily from better results in repo.
Equities Net Revenues: $3.3 billion, with equities intermediation revenues of $2 billion (up 14% year-over-year) and equities financing revenues of $1.3 billion.
Asset & Wealth Management:
Revenues: $3.8 billion, up 18% year-over-year.
Management and Other Fees: $2.5 billion, a 7% year-over-year increase.
Incentive Fees: $88 million, expected to reach $1 billion annually in the medium term, supported by $3.8 billion in unrecognized incentive fees.
Private Banking and Lending Revenues: $682 million, significantly higher due to the prior year's impact of the partial sale of the Marcus loan portfolio.
Equity and Debt Investments Revenues: $567 million, with improved performance in private portfolios.
Platform Solutions:
Revenues: $698 million.
Pre-tax Net Loss: $117 million, with expectations to reach pre-tax breakeven next year.
Key Financial Metrics
Market Cap: $145.2 billion
Dividend Yield: 2.4%
P/E Ratio (TTM): 17.6
P/E Ratio (Forward 1 Year): 12.5
Earnings Per Share (EPS) Growth (2023): 59.2%
Stock Price: $450.18 (June 2024)
Target Price: $518 (6-12 months projection)
Technical setup
A bull flag pattern is forming with a bullish breakout, indicating the continuation of the trend upward.
Since the local low, formed around the previous earnings the price saw a steep price trend to the upside, before taking a breather and forming the flag.
The Price-to-sales ratio currently sits well below the average which is another bullish signal since the ratio tends to navigate towards its average.
The Month-over-month returns have bottomed around the lower threshold and are ready for a bounce back.
The Wallstreet ratings are predominantly strong buy, giving it a max target price of $525 or +13% up from the current price.
Institutional ownership is rising according to the latest May fillings which is another positive catalyst for the price as it is generally good to follow the smart money.
Overall, my short-term expectations are bullish, driven by the price forming of a bull flag, strong fundamentals and business outlook, and bullish catalysts driven by Wall Street consensus and the smart money flows.
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