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Goldman Sachs Group Inc GS

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Goldman Sachs Reports Monstrous First-Quarter Results That May Persist for a While

Michael Wong, CFA, CPA Sector Director

Analyst Note

| Michael Wong, CFA, CPA |

Goldman Sachs reported record results in the first quarter of 2021, and results could take a while to normalize lower. The company reported record quarterly earnings to common shareholders of $6.7 billion, or diluted earnings per share of $18.60, on a quarterly record net revenue of $17.7 billion. The company also had record investment banking revenue of $3.8 billion, record asset management segment revenue of $4.6 billion, record consumer and wealth management segment revenue of $1.7 billion, and record assets under supervision of $2.2 trillion. Annualized return on tangible equity for the quarter was also 32.9%. We don’t expect to make a material change in our $269 fair value estimate for Goldman Sachs from this quarter’s results. However, we are considering decreasing the cost of equity that we use in our model to 10% from 11%, which would increase our fair value estimate for the company by about 10% to a little over $300. The decrease in our cost of equity assumption would be predicated on the firm building up its more stable investment management and consumer banking businesses.

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Company Profile

Business Description

Goldman Sachs is a leading global investment banking firm whose activities are organized into investment banking (20% of net revenue), global markets (40%), asset management (25%), and consumer and wealth management (15%) segments. Approximately 60% of the company's net revenue is generated in the Americas, 15% in Asia, and 25% in Europe, the Middle East, and Africa. In 2008, Goldman reorganized itself as a financial holding company regulated by the Federal Reserve System.

200 West Street
New York, NY, 10282
T +1 212 902-1000
Sector Financial Services
Industry Capital Markets
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 40,500