Investors got a little irritable last quarter when investment-banking firm Goldman Sachs (NYSE: GS ) "only" matched the average analyst estimate. Well, boys and girls, that wasn't a problem this time around. The company blew away the average estimate with incredible performance across the board.
Overall net revenue was up 64%, and net earnings, including stock-compensation expenses, rose 52%. Management announced a 40% dividend hike as the money keeps pouring in.
Business was strong from top to bottom. Investment-banking revenue was up 65% on both strong advisory (that is, merger-and-acquisition) and underwriting results. Trading revenue rose 57% and made up two-thirds of the total, while fixed income, commodities, and equities all showed some strength. Last and not least, asset-management revenue jumped 75% and assets under management increased 7% from the year-ago level.
If there is a potential fly in the ointment, it may be the risk that Goldman is taking on to produce this level of performance. The company's value at risk -- that is, the amount of money the company could lose in a single day from adverse trading results -- jumped almost 42% from last year's level and 15% sequentially, with a lot of that increase coming from the equities side of the ledger.
Now, I'll grant that Goldman Sachs' rising assets and book value mitigate some of that setback. After all, if you have more money, you can afford to risk more. I wouldn't go so far as to suggest that Goldman Sachs is really a hedge fund in disguise, but there's no denying that trading is a big driver of results. I also wonder, too, whether we might see an investigation someday relating to banks like Goldman, Merrill Lynch (NYSE: MER ) , or Lehman Brothers (NYSE: LEH ) exploiting their knowledge of what clients are doing to improve their own trading performance.
In my view, though, that's all just noise. Goldman Sachs has been a top-notch bank for a long while now, and I see nothing to suggest that it's backsliding. Even though the stock has had a pretty fair run already, it wouldn't surprise me in the least to see share prices continue to rise. If nothing else, Goldman can be a lesson that good companies just have a habit of continuing to outperform.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).