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Global investment banking leader Goldman Sachs (GS Free Goldman Stock Report) reported lackluster financial results for the first quarter of 2019. The company's revenue and share-net figures were both down from the same period in 2018.

Earnings-per-share came in at $5.71 for the March period, which was below our estimate of $6.50, as well as the $6.95 figure in the previous-year period. Meanwhile, revenues of $13.186 billion were slightly above our $13.0 billion estimate, but declined from $13.392 billion in the first quarter of 2018. The decrease primarily reflected weaker activity in the Institutional Client Services and Investing & Lending segments.

Institutional Client Services took a hit from slower equities client execution, particularly in derivatives, compared with a strong comparison period last year. Additionally, commissions and fees were lower, reflecting lower market volumes. Meanwhile, Investing & Lending revenues reflected significantly lower gains from investments in private equities.

In spite of these setbacks, the company appears set for full-year revenue and earnings growth. We have left our 2019 revenue estimate unchanged at $54 billion, and while we have reduced our share-net outlook by a dollar, we expect earnings-per-share of $26.00 to outpace the $25.27 sum from last year. Furthermore, we anticipate improved momentum to drive 2020 revenues to $56 billion and share net to $29.00.

Meanwhile, the company is returning capital to shareholders. During the first quarter, Goldman Sachs repurchased 6.3 million shares of common stock for a total of $1.25 billion. Moreover, the board of directors increased the quarterly cash dividend to $0.85 per common share beginning with the June payout, up from $0.80 previously.

All told, we believe shares of Goldman Sachs remain a solid long-term investment on a risk-adjusted basis.

About The Company:The Goldman Sachs Group is a global investment banking and securities firm. It operates in four business segments: Investment Banking (22% of 2018 revenues); Institutional Client Services (37%); Investing & Lending (22%); and Investment Management (19%). 

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.