Goldman Sachs Earnings: Strong Start to Year as Investment Banking and Trading Power Results

Investment banking revenue is recovering from recently depressed levels, but it was overshadowed by exceptionally strong trading results. Goldman Sachs reported net income to common shareholders of $3.9 billion, or $11.58 per diluted share, on $14.2 billion of net revenue. Investment banking revenue increased 32% from a year ago and 26% from the previous quarter to $2.1 billion. However, commissions and market-making revenue of $7.1 billion was about 8% higher than the previous year and 60% higher sequentially. Annualized return on equity for the quarter was 14.8% and return on tangible common equity was 15.9%. We don't anticipate making a material change to our $417 fair value estimate for narrow-moat Goldman Sachs and assess that shares are fairly valued.