Goldman Sachs’ Earnings Are Fairly Decent Amid Reorganizing of Segments; Shares Undervalued

While Goldman Sachs’ earnings were down over 40% from a year ago, results were still fairly decent from a historical perspective. The company reported net income to common shareholders of $3 billion, or $8.25 per diluted share, on $12 billion of net revenue. Net revenue fell 12% from a year ago and net income fell 44%, while net revenue sequentially increased 1% and net income increased 6%. 2020 and 2021 net revenue were abnormally high, so we believed that revenue would have reset lower over the 2022 to 2024 period even if the global economy wasn’t on the borderline of a recession. Despite the year-over-year decline, pretax earnings of $3.8 billion were still about 30% higher than the prepandemic, 2017 to 2019 quarterly average. We don’t anticipate making a material change to our $438 fair value estimate for narrow-moat Goldman Sachs and assess shares are undervalued.