Why Is Goldman (GS) Down 10% Since Last Earnings Report?

Goldman Q2 Earnings Beat on Solid Trading & IB Revenues

Goldman reported second-quarter 2026 earnings per share of $20.98, which topped the Zacks Consensus Estimate of $14.47. The metric also surged 92% from $10.91 a year ago.

Driven by robust client activity, Goldman posted record net revenues in Equities of $7.42 billion, which jumped 72% year over year, while fixed income, currencies and commodities (FICC) revenues climbed 32% to $4.59 billion. Strong dealmaking activity lifted investment banking (IB) fees 55% to $3.40 billion, supported by solid growth in advisory, equity underwriting and record debt underwriting revenues. 

Goldman’s overall results benefited from strong revenue growth in the Global Banking & Markets and Asset & Wealth Management businesses, while profitability was highlighted by an annualized return on equity of 23.5%. However, higher operating expenses created a headwind. Shares of the company rose in the pre-market trading following the earnings release.

Net earnings attributable to common shareholders were $6.40 billion, up 84% year over year.

Revenues & Expenses Increase

Net revenues were $20.34 billion, rising 39% year over year and comfortably surpassing the Zacks Consensus Estimate of $16.49 billion by 23.3%.

On the cost side, operating expenses were $11.67 billion, up 26% from the prior-year quarter. Management attributed the increase primarily to significantly higher compensation and benefits expenses, reflecting improved operating performance, along with substantially higher transaction-based expenses.

Even with higher costs, Goldman’s efficiency ratio declined 6 basis points to 57.4% for the quarter, reflecting continued operating leverage.

Provision for credit losses was $102 million, down sharply from $384 million in the year-ago quarter, primarily reflecting impairments related to wholesale loans.

Quarterly Segmental Performance

Asset & Wealth Management generated net revenues of $4.60 billion, up 20% year over year. The increase primarily reflected record management and other fees, driven by higher average assets under supervision and significantly higher investment gains from private equity investments, partially offset by weaker private banking and lending revenues. The franchise continued to scale meaningfully. Total assets under supervision increased to a record $4.04 trillion, reflecting $230 billion in total net inflows and $91 billion in long-term net inflows during the quarter.

Global Banking & Markets generated record net revenues of $15.52 billion, up 53% year over year. Growth was driven by record Equities revenues, stronger FICC performance and significantly higher investment banking fees across advisory, equity underwriting and debt underwriting.

Platform Solutions reported net revenues of $221 million, down 64% from the year-ago quarter. The decline primarily reflected net markdowns related to the Apple Card loan portfolio, which had previously been transferred to held for sale.

Balance Sheet & Capital Position

Goldman ended the second quarter with total assets of $2.13 trillion, up from $2.06 trillion at the end of the first quarter, while deposits were $558 billion compared with $561 billion in the previous quarter. Total loans increased sequentially to $261 billion from $253 billion.

Capital ratios strengthened sequentially. The standardized CET1 capital ratio improved to 12.9% from 12.5%, while the advanced CET1 ratio rose to 13.7% from 13.3%. The supplementary leverage ratio was 4.3% compared with 4.7% in the prior quarter. 

During the quarter, Goldman returned $5.36 billion to its shareholders, including $4 billion in common share repurchases and $1.36 billion in common stock dividends. 

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a upward trend in fresh estimates.

The consensus estimate has shifted 11.11% due to these changes.

VGM Scores

Currently, Goldman has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock has a score of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Goldman has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

Zacks' Research Chief Names "Stock Most Likely to Double"

Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.

This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research