Please ensure Javascript is enabled for purposes of website accessibility

Goldman Sachs Just Posted Its Best Quarter Ever

By Matthew Frankel, CFP® - Apr 14, 2021 at 8:40AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Here's what investors need to know.

Investment banking giant Goldman Sachs (GS 0.61%) was one of the first companies to report its first-quarter 2021 results, and the company certainly set a high bar. Not only did the company handily surpass analysts' expectations, but the bank's first-quarter revenue and earnings were the highest they've ever been.

On the top line, Goldman generated $17.7 billion in revenue, more than $5 billion better than analysts had been looking for. And there were a few good reasons for this. The IPO market has been exceptionally strong -- especially in the SPAC world, as we saw hundreds of blank check companies go public in the first quarter. As a result, Goldman's investment banking revenue soared by 73% year over year.

Two businessmen looking at financial data on screens.

Image source: Getty Images.

Trading revenue, which is Goldman's largest revenue source, was a particularly strong point as well. Helped by high market volatility and rising fixed income interest rates, trading revenue climbed by 47% from the first quarter of last year, which itself was a volatile and strong quarter for trading.

Consumer banking is still a relatively small part of Goldman's business, but it continues to grow rapidly as the Marcus savings and loan platform and Goldman's credit card business expand. In the first quarter, consumer banking revenue grew by 32% year over year, and it is certainly an area to watch going forward.

Finally, Goldman shattered expectations on the bottom line with $18.60 per share of earnings, well ahead of the $10.22 that had been projected. For reference, Goldman earned $24.74 for the entire year of 2020.

To be sure, investors shouldn't expect the first quarter's performance to repeat throughout the rest of the year. The IPO market (especially SPACs) has cooled off significantly, and market volatility on both the equities and fixed income sides is relatively low compared to the first quarter. Even so, this was an absolute blowout quarter for Goldman Sachs, and the bank stock's investors should be very pleased with the results.

Matthew Frankel, CFP owns shares of Goldman Sachs. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Goldman Sachs Group, Inc. Stock Quote
The Goldman Sachs Group, Inc.
$353.82 (0.61%) $2.14

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/14/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.