Shares of Goldman Sachs Group Inc (NYSE:GS) were down throughout the trading day on Tuesday after the company reported disappointing first-quarter results.
The investment banking giant fell short of expectations, and with other big banks posting reporting much stronger numbers, many investors are beginning to look elsewhere.
Where Goldman Falls Short
For the first quarter, Goldman Sachs posted earnings of $5.15 per share. While this was nearly double that of the year-ago quarter, it fell well-below our Zacks Consensus Estimate of $5.38 per share. Revenues also came in below our expectations, with a reported $8.026 billion coming in below our consensus estimate of $8.368 billion.
The bank’s disappointing results were brought on by a slight drop in trading revenue, which is usually considered its bread and butter. Goldman saw about a 2% in decline in trading revenue—a result that management blamed on a calmer market that produced less trading.
Bank Stocks Show Strength Elsewhere
Interestingly enough, Goldman’s results were contrasted by the results of other big banks, which saw strength in their respective trading segments.
For example, Bank of America Corp (NYSE:BAC) surpassed expectations on the top and bottom lines thanks to solid growth in its investment banking and trading units. The company posted revenues of $22.248 billion, which outpaced our consensus estimate of $21.540 billion, and earnings of 45 cents per share, which beat our Zacks Consensus Estimate of 35 cents.
Bank of America’s global fixed-income trading revenue grew 29%, while Goldman only posted a 1% gain in its fixed-income segment. The stock remains a Zacks Rank #2 (Buy), and company management remains confident in its current position.
“This quarter shows the value of our businesses as rates begin to rise and as we experience increased capital markets activity,” said CEO Brian Moynihan.
Another banking stock that posted better results than Goldman Sachs is PNC Financial Services Group Inc (NYSE:PNC).
The company, which reported first-quarter results last week, saw earnings per share of $1.96 and revenues $3.884 billion. These figures surpassed our respective consensus estimates of $1.84 and $3.778 billion.
Continued growth in loans and deposits helped the company earn higher revenues during the quarter. Segment wise, on a year-over-year basis, the quarterly net income in Corporate & Institutional Banking and Other, including the investment management brand BlackRock, improved 22% and 30%, respectively.
PNC has seen four positive estimate revisions for the current quarter and currently sports a Zacks Rank #2 (Buy).
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