Rise In Trading Activities To Aid Goldman's (GS) Q4 Earnings
Zacks Investment Research | Jan 12, 2020 08:21PM ET
Rise in client activities is likely to have aided Goldman Sachs’ (NYSE:GS) fourth-quarter 2019 earnings, slated for release on Jan 15. Uncertainty related to the U.S.-China trade war and Brexit, expectations of global economic slowdown, the Federal Reserve’s accommodative stance and a number of activities in the latter part of the quarter, along with strong domestic economy, kept tickling trading counters.
Further, Goldman’s investment management business might have supported earnings in the quarter. Prior investments in fixed income, alternatives and low-cost index funds may keep reaping benefits to some extent.
Other Factors at Play
Soft Investment Banking Fees: Trade concerns and fears of global economic slowdown hurt investment banking revenues in 2019. While dealmakers across the globe were active during the fourth quarter, M&A deal value and volume witnessed a fall due to several geopolitical concerns as the companies became more risk-averse. Therefore, this might have had an adverse impact on Goldman’s advisory fees.
Equity markets performance and the central banks’ accommodative stance drove corporates to issue equities across the globe. Further, bond issuance volumes were strong, while debt issuances were muted as loan demand was soft. Hence, Goldman’s equity underwriting fees and debt origination fees (accounting for almost 55% of total investment banking fees) might have been affected, with its commendable position in the market likely to have offered some respite.
Muted Net Interest Income Growth: Low interest rates during the October-December quarter might have dampened banks’ net interest margin. Also, per the Fed’s latest The Goldman Sachs Group, Inc. Quote
Other Stocks That Warrant a Look
Here are some other stocks you may want to consider, as according to our model these have the right combination of elements to post an earnings beat this quarter.
The PNC Financial Services Group, Inc (NYSE:PNC) is set to report earnings on Jan 15. The company has an Earnings ESP of +0.36% and carries a Zacks Rank of 2 (Buy). You can see Zacks Investment Research
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