Goldman Sachs Beats Q4 Earnings, Revenue Soars
Goldman Sachs Group (NYSE:GS) reported its Q4 earnings, with EPS of $5.48 coming in better than the consensus of $3.80. Revenue grew 7% year-over-year to $11.32 billion, beating the consensus estimate of $10.83 billion. The increase reflected higher net revenues in Asset & Wealth Management and Platform Solutions, partially offset by lower net revenues in Global Banking & Markets.
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Morgan Stanley Reports Strong Revenue, Profit Impact
Morgan Stanley (NYSE:MS) shares dropped more than 4% on Tuesday after the company reported its Q4 earnings, topping revenue expectations, as reported in real-time on InvestingPro. Quarterly revenue came in at $12.9 billion, compared to the consensus estimate of $12.79 billion. Meanwhile, EPS was $0.85, missing the consensus estimate of $1.08. Morgan Stanley’s Q4 pre-tax income included $535 million of charges, with $286 million related to an FDIC special assessment and a $249 million legal charge related to a “specific matter”.
Following the report, two Wall Street firms downgraded the bank. JPMorgan cut Morgan Stanley’s rating from Overweight to Neutral with a price target of $87.00 (from $94.00). Meanwhile, Keefe, Bruyette & Woods downgraded the company from Outperform to Market Perform with a price target of $91.00 (from $102.00).
Charles Schwab Sees Drop in Q4 Profit
Charles Schwab’s (NYSE:SCHW) profit in Q4 dropped by 47%, impacted by higher interest expenses on client deposits and debt, despite an increase in asset management fees. The aggressive interest rate hikes by the U.S. Federal Reserve have adversely affected financial firms like Schwab, which are dependent on client deposits and uninvested cash for bond purchases and loans. For Q4, Charles Schwab reported an EPS of $0.68, compared to the consensus estimate of $0.64. Revenue came in at $4.46 billion, missing the consensus estimate of $4.53 billion.
Discover Financial Services’ Q4 Profit Misses Expectations
Discover Financial Services (NYSE:DFS) shares saw a drop of more than 10% on Thursday following the company’s report of a substantial decrease in its Q4 net income. This decline was partly attributed to increased compliance-related expenses. The Illinois-based company recorded a net income of $388 million for the quarter, marking a 62% fall from the same period the previous year. This equated to diluted EPS of $1.54, notably lower than the consensus estimate of $2.52. Meanwhile, revenue for the quarter came in at $4.2 billion, above the consensus estimate of $4.11 billion.
Analyst comment
1. Goldman Sachs: Positive news. Market to potentially respond favorably with an increase in stock price.
2. Morgan Stanley: Negative news. Market likely to react negatively with a decrease in stock price due to missed earnings and downgrades from Wall Street firms.
3. Charles Schwab: Negative news. Market may react negatively with a decrease in stock price due to lower profit and missed revenue estimates.
4. Discover Financial Services: Negative news. Market expected to respond negatively with a significant drop in stock price due to a substantial decrease in net income and missed EPS estimates.
