2024-04-22 12:40:11 ET
Summary
- Goldman Sachs has reoriented its corporate strategy towards investment banking and sales & trading, leading to a substantial earnings beat in Q1 2024.
- The bank's focus on high-margin activities and a robust recovery in its investment banking division is likely to result in an upward P/E re-rating.
- The bank's strong Q1 performance and refocus on its core strengths make it a buy for investors, with potential for continued growth in M&A and capital markets.
Investment Thesis
I believe post Q1 report, Goldman Sachs (GS) has reoriented their corporate strategy once again emphasizing investment banking, and sales & trading, the places that the bank built its reputation. This is reflected in the bank's substantial earnings beat for Q1 2024, with earnings per share coming in at $11.58 , and overall net income up by 27.76% YoY . The results were above consensus estimates of $8.56/share. The rise was driven by its rebound in global M&A activity in the same quarter.
While the nation's fifth-largest bank's Price-to-Earnings (P/E) ratio on a trailing twelve-month basis stands at 15.78, higher than the sector median of 9.95, the bank's forward P/E ratio is much more reasonable compared to sector median....
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Goldman Sachs Q1: I See A Turnaround