It didn’t really help that the last few weeks my bedtime reading at night was the “Billion Dollar Whale”, the story of the now-infamous Malaysian Jho Low and the pilfering of the 1MDB Malaysian sovereign debt fund, where Low basically spent $12 billion of the fund’s proceeds on everything from excessive partying, to artwork, to real estate, to yachts, to you name it, some of the debt issuance aided by the most respected of all former white-shoe firms, Goldman Sachs (GS).
Gary Cohn and Lloyd Blankfein aren’t exactly portrayed in a favorable light at the end of the book, particularly after the posturing post-2008, but all that being said, the issue is behind Goldman and it’s not worthy of further discussion.
Goldman reports its Q3 ’20 financial results on Wednesday, October 14th, before the opening bell, with current Street consensus per IBES by Refinitiv, expecting $5.22 in EPS on $9.25 billion in revenue for expected y/y growth of 9% and 11% respectively.
It was a monster second quarter that Goldman reported in mid-July ’20, when the investment banking giant printed $6.26 in earnings per share versus a $3.13 estimate on revenue of $13.3 billion versus the IBES/Refinitiv estimate of $9.76 billion for upside surprises of 100% and 36% respectively.
Goldman’s net revenue grew 41% y/y in Q2 ’20, generating 8% EPS growth, also y/y.
Q2 ’20 results were emblematic of the late 1990s’/early 2000s’ monster quarters the investment banks printed in robust markets.
Fixed-income revenue was 120% higher y/y while equity revenue was 60% higher, with fixed income primarily driven by the explosion in corporate bond issuance after Jay Powell lit the lamp in late March/early April ’20 announcing the various Fed liquidity programs.
Source: Internal valuation s/sheet from earnings releases, 10-Qs
When looking at current forward estimates