Goldman Sachs Stock Drops Despite 54% Earnings Jump: Time to Buy?

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Goldman Sachs Group Inc News

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The firm got a lift from rising investment banking revenue.reported healthy third-quarter earnings Tuesday, led by significant gains in investment banking.

Goldman Sachs’ stock was up about 3% in pre-market trading but then flattened out after the markets opened. As of 10:30 a.m. ET it was trading at just over $518 per share, down about 1% for the day. The stock price has gained approximately 34% year-to-date. In Q3, its Global Banking and Markets division saw revenue climb 12% year over year to $26.5 billion, but drilling down a bit within this segment, its investment banking fees soared 24% to $5.7 billion. Debt underwriting rose 41% year over year while equity underwriting surged 31%.

The strong bottom-line results, showing a 54% increase in earnings per share to $8.40 per share, were aided not only by higher revenue, but lower operating expenses. Goldman Sachs stock remains a pretty good value, with a forward P/E ratio of just 13. Market analysts rate it as a consensus buy, but its median price target of $522 per share suggests just a 5% increase.

 

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