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3 Companies That Crushed Earnings Estimates This Quarter

By Courtney Carlsen – Updated Aug 2, 2021 at 4:30PM

Key Points

  • The economic reopening has continued to play out as vaccinations are widely distributed.
  • The reopening, along with monetary and fiscal support, has created a positive environment for M&A activity, automotive sales, and small business loan growth.

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The economic reopening has favored several companies -- and these finance specialists have benefited more than others.

We are in the thick of earnings season, and three companies have already stood out among the releases after they crushed earnings in their most recent quarter.

Goldman Sachs (GS 0.35%), Ally Financial (ALLY 1.65%), and Live Oak Bancshares (LOB 3.14%) all posted stellar earnings results this quarter, and each of them beat analysts' estimated earnings per share (EPS) by 47% or more. The three companies benefited as the economic reopening continues to play out, but they saw tailwinds from different aspects of the recovery.

Six people gathered around a conference table while two of them shake hands.

Image source: Getty Images.

1. Goldman Sachs: Beat estimated EPS by 47%

Goldman Sachs posted EPS of $15.02, crushing analysts' estimated EPS of $10.23. The investment bank reported net revenue of $15.4 billion, its second-highest quarterly result on record, which beat estimated revenue by 27%.  

The company saw an impressive performance from its investment banking segment, due to strong mergers and acquisition (M&A) activity, as well as good equity underwriting activity. Goldman Sachs ranked first in the world in equity underwriting, with volume of $85 billion representing 10% of the volume market share. As a result, its investment banking segment pulled in $3.6 billion in net revenue in the quarter, up 36% from last year.  

Goldman Sachs' asset management segment posted a stellar performance as well. During the period, its assets under supervision hit $1.6 trillion as the segment benefited from strong equity investment gains, reflecting the robust market backdrop. Asset management pulled in a record $5.1 billion in net revenue during the quarter, up 144% from the same period last year.  

CEO David Solomon is optimistic about the company's future prospects, too, citing strong demand for its investment banking services. He said the U.S. economy is in the middle of a significant rebound, and that central bank support and fiscal stimulus should continue to support the economy and be a positive catalyst for Goldman Sachs in the coming periods.  

2. Ally Financial: Beat estimated EPS by 60%

Ally Financial reported EPS of $2.33, easily besting analysts' estimated EPS of $1.46. The bank posted record revenue of $2.1 billion in the quarter, beating estimated revenue by 12%.  

The digital bank got a boost from a favorable economic backdrop, too, with strong trends emerging in consumer spending and the broader automotive market. Ally Financial saw good credit trends as well, which helped it produce its best retail auto credit performance on record. Net charge-offs for the bank were negative 0.02%, the lowest level ever in its 102-year history. 

Person handing paperwork to two people at a car dealership.

Image source: Getty Images.

Consumer originations within its auto segment were $12.9 billion -- its highest in 15 years, while yielding 7.5%. The bank noted that strong consumer demand, driven by healthy consumer spending power, along with its continued expansion of dealer relationships, helped push earnings to record levels.  

Ally Financial also noted that robust demand continues to outpace production, pushing auto inventories to the lowest levels in decades. As a result, used car values are expected to remain elevated through the end of this year, which should continue to serve as a tailwind for the bank in the coming periods.  

3. Live Oak Bancshares: Beat estimated EPS by 147%

Live Oak Bancshares posted EPS of $1.41, thrashing analysts' estimated EPS of $0.57. The bank reported record revenue of $141.5 million in the quarter, beating estimated revenue by 55%.  

The impressive results can be attributed to a couple of things. For one, it had a $44 million gain in its Greenlight Financial Technology shares following a Series D capital raise, which saw its Live Oak Ventures arm sell a portion of its shares. Greenlight is a creator of smart debit cards for kids, teens, and college students and aims to transform family banking.  

Live Oak's originations reached a record high of $1.1 billion, with credit quality improving during the quarter as well. The strong growth is a continuation of a trend for the leading bank for small businesses, which has grown its loan portfolio at a 37% compound annual growth rate over the past 10 quarters.

Management has noticed the financial conditions for many of its most impacted businesses are showing improvements, especially within the healthcare, investment advisory, and debt care industries. Going forward, Live Oak should continue to perform well as the economic recovery progresses, which could serve as a tailwind to small business lending.

Ally is an advertising partner of The Ascent, a Motley Fool company. Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Live Oak Bancshares. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Goldman Sachs Stock Quote
Goldman Sachs
$383.71 (0.35%) $1.35
Ally Financial Stock Quote
Ally Financial
$26.51 (1.65%) $0.43
Live Oak Bancshares Stock Quote
Live Oak Bancshares
$32.23 (3.14%) $0.98

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