Goldman’s Earnings Plunge

Bloomberg writes:

Goldman Sachs Group Inc.’s earnings dropped 52 percent, the third straight quarterly decline, as a slowdown in trading and investment banking reduced revenue more than analysts estimated. The shares fell by the most in almost two months.

Fourth-quarter net income decreased to $2.39 billion, or $3.79 a share, from $4.95 billion, or $8.20, a year earlier, the New York-based company said today in a statement. Estimates of 22 analysts surveyed by Bloomberg averaged $3.79 a share.

Chief Executive Officer Lloyd C. Blankfein, 56, worked to maintain Goldman Sachs’s profitability and reputation last year as client-trading revenue dropped 33 percent from a record in 2009 and the bank settled a civil fraud lawsuit filed by a U.S. regulator. Last week Goldman Sachs released a set of new business practices and changed financial reports to separate client-trading revenue from gains and losses generated by bets with its own money.

“We would see this as a disappointing performance and remain concerned that fixed-income revenues will remain weak into 2011,” Richard Staite, an analyst at Atlantic Equities in London, said in a note to clients after earnings were released.

The stock has rallied impressively since early July. Goldman has regained almost everything it lost since the SEC case broke.

I think Goldman is fairly cheap, as are many financial stocks, but I think stocks like JPMorgan Chase (JPM) are better values.

Posted by on January 19th, 2011 at 10:14 am


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