Goldman Sachs’ Earnings Data Rally Should be Viewed as a Take-Profit Opportunity

Goldman Sachs (GS) shares rose 3.4% in premarket trading today, on Tuesday, October 15, after Q3 2024 results reliably beat Wall Street consensus on something that could be easy to predict — namely, higher net interest income.

Among the business groups reported, Global Banking & Markets sales included strong performance across the board — in equities and record quarterly net sales in fixed income, currencies and commodity financing. Asset and Wealth Management revenue benefited from record quarterly management fees and other received commissions. All in all, Q3 GAAP EPS was reported at $8.40, beating the consensus estimate of $6.92 but down from $8.62 in Q2 and $5.47 in Q3 last year. Total net sales rose to $12.7 billion, also beating median expectations of $11.8 billion, being flat sequentially and down from $11.8 billion a year ago.

Q3 net interest income was $2.62 billion, exceeding consensus of $1.96 billion and increasing from $2.24 billion in Q2 to $1.55 billion in Q3 2023.

One item to worry about: Provisions for credit losses rose $3.6 million to $397 million, compared with the consensus estimate of $413.6 million, but notably up from $282 million in the previous quarter and just $7 million a year ago. At this point, GS stock should be rated as underperform until more reliable positive data comes out.