The mainstream investment bank, Goldman Sachs reported earnings for the second quarter last week as expected. Unfortunately however, earnings came in incredibly low. Nonetheless, I don't think earnings were all that bad. As a matter of fact, there's one key issue that caused the poor earnings; and it's not likely to repeat itself anytime soon. Today, we'll take a look at Goldman Sachs' earnings report, how the market reacted to earnings, what we can expect to see moving forward, and how binary options traders can profit from the trends. So, let's get right to it!
Goldman Sachs Earnings Report Leaves Mixed Feelings
Goldman Sachs reported their earnings on Thursday of last week; releasing the following numbers…
- Earnings Per Share – Earnings per share was a big miss; coming in at $1.98. Analsyts expected to see earnings per share come in at $3.89. This also proved to be a major year over year decline; down from $4.10 in the same quarter last year.
- Top-Line Revenue – Top line revenue for the quarter came in at $9.07 billion; beating analyst expectations of $8.78 billion, but still falling short of the $9.13 billion realized in the same quarter last year.
So, all in all, the earnings release was far less than desirable. However, there's more to the story here. Throughout the quarter, Goldman Sachs was dealing with mortgage-related litigation costs that came to a total of $1.45 billion. This equates to about $2.77 per share. Therefore, before litigation costs, the company smashed earnings expectations; coming in at a whopping $4.75 per share!
How The Market Reacted To The News
On Thursday, Goldman Sachs had a rough day in the market; as we would expect when earnings prove to be negative. Ultimately, the stock lost a little more than 1% on the day of the earnings release. However, it seems as though investors started to look into underlying reasons for poor earnings on Friday as the stock edged back up; making up the vast majority of gains.
What I Expect To See Moving Forward
Moving forward, I'm expecting for Goldman Sachs to continue being the powerhouse stock that we know it is. While this quarter's earnings were less than desirable thanks to litigation expenses, Goldman Sachs has seen incredible year over year growth in the market; and that trend isn't likely to come to an end anytime soon. After all, without litigation costs, the company absolutely blew away earnings expectations, and when it comes to top-line revenue, the same is true! Ultimately, when we talk about Goldman Sachs, we're talking about a company that has proven its ability to generate gains time and time again. As a matter of fact, this is the first time in the last 8 quarters that GS hasn't absolutely blown away earnings expectations; and if it wasn't for litigation costs, they would have!
How To Profit From The Trends
While Goldman Sachs has made up for the majority of what it lost on Thursday, it is still down a bit. Therefore, I'm expecting to see a continuation of uptrends on Monday. So, binary options traders should watch for support and purchase calls to take advantage of the upward movement.
What Do You Think?
Where do you think Goldman Sachs is headed and why? Let us know in the comments below!
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