After the close, Goldman Sachs (GS) became the second big bank in as many days to report earnings that simply blew away analyst estimates. For the first quarter of 2009, Goldman earned $1.66 billion or $3.39 per share, which was more than double the First Call consensus of $1.64 and the Reuters estimate of $1.49. Apparently Goldman couldn’t wait to release their numbers as the announcement came a day earlier than scheduled.
The news came just one trading day after Wells Fargo (WFC) surprised the street with an earnings preannouncement that also more than doubled expectations. Thus, so far this earnings season, the score is: Big Banks 2, Bears 0.
The reason for the outsized gains appears to be strong trading revenue. Reuters reports that client trading volume in fixed income, currencies, and commodities was well above expectations at $6.56 billion.
Goldman also announced a $5 billion stock offering to the public. It is generally expected that the securities titan will use the proceeds to pay back the $10 billion in TARP money it borrowed from the government. This assumes, of course, that Goldman is given a passing grade on the government’s “stress test.”
While Goldman’s stock had a strong day and is up 76% since March 9th, the stock traded lower in the after-hours session on the heels of the stock offering which would dilute the holdings of existing shareholders.
Still to come this week we’ll get earnings from Morgan Stanley (MS) on Wednesday, JP Morgan Chase (JPM) on Thursday, and Citi (C) on Friday.
So, with two big wins for the bulls so far, the argument appears to be growing stronger that we’ve seen the worst from the banking crisis and in turn, the bear market. However, with stocks up five weeks in a row, one has to wonder how much more the bulls have in them before taking a well-deserved rest.
Goldman Sachs
Goldman Sachs
S&P 500
S&P 500
