Goldman Sachs Earnings: Company Incurs Impairments to Clean Up Some Investments

Goldman Sachs took some impairments on its investments in the quarter, while investment banking revenue may be bottoming. The company reported net income to common shareholders of $1.07 billion, or $3.08 per diluted share, on $10.9 billion of net revenue. Net revenue declined 9% from the previous year and 11% from the previous quarter, mainly due to declines in trading and merger advisory revenue. Earnings in the quarter were depressed by multiple impairments, including about $500 million for its consumer banking platforms business and another $500 million on real estate investments. These impairments are symptomatic of the state of the economy and the cost of Goldman Sachs stretching beyond its traditional capital markets businesses, but they overall aren't material to the company's total market value that is over $100 billion. We don't anticipate making a material change to our $410 fair value estimate for narrow-moat Goldman Sachs and assess shares are undervalued.