Goldman Sachs Earnings: Trading Revenue Helps Results, Progress Made in Reducing Consumer Business

Goldman Sachs' trading business helped first-quarter results, while the company made progress in winding down portions of its consumer business. Goldman Sachs reported net income to common shareholders of $3.1 billion, or $8.79 per diluted share, on $12.2 billion of net revenue. Investment banking revenue remained subdued, given the uncertainty in the macroeconomy, with the segment's top line down 26% from the previous year (and down about 55% from the company’s 2021 average revenue run rate). While management mentioned seeing “green shoots” for investment banking activity, we find it hard to believe there will be a significant uptick until the question of a recession is resolved and interest rates decline. Trading was a relative bright spot, down just 13% from the previous year but up 46% sequentially. We expect to maintain our $410 fair value estimate for narrow-moat-rated Goldman Sachs and assess the shares as moderately undervalued right now.