Looking back on investment banking & brokerage stocks’ Q3 earnings, we examine this quarter’s best and worst performers, including Goldman Sachs (NYSE: GS) and its peers.
Investment banks and brokerages facilitate capital raises, mergers and acquisitions, and securities trading. The sector benefits from corporate activity during economic expansion, increased retail trading participation, and advisory opportunities in emerging sectors. Headwinds include economic cycle vulnerability affecting deal flow, compressed trading commissions due to electronic platforms, and regulatory capital requirements constraining certain higher-risk activities.
The 16 investment banking & brokerage stocks we track reported a very strong Q3. As a group, revenues beat analysts’ consensus estimates by 4.2% while next quarter’s revenue guidance was in line.
In light of this news, share prices of the companies have held steady as they are up 2.4% on average since the latest earnings results.
Goldman Sachs (NYSE: GS)
Founded in 1869 as a small commercial paper business in New York City, Goldman Sachs (NYSE: GS) is a global financial institution that provides investment banking, securities, asset management, and consumer banking services to corporations, governments, and individuals.
Goldman Sachs reported revenues of $15.18 billion, up 19.6% year on year. This print exceeded analysts’ expectations by 6.8%. Overall, it was a stunning quarter for the company with an impressive beat of analysts’ Banking & Markets segment estimates and a solid beat of analysts’ Asset & Wealth Management segment estimates.
Interestingly, the stock is up 6.4% since reporting and currently trades at $838.48.
Best Q3: Morgan Stanley (NYSE: MS)
Founded in 1924 during the post-WWI economic boom by former JP Morgan partners, Morgan Stanley (NYSE: MS) is a global financial services firm that provides investment banking, wealth management, and investment management services to corporations, governments, institutions, and individuals.
Morgan Stanley reported revenues of $18.22 billion, up 18.5% year on year, outperforming analysts’ expectations by 9.2%. The business had an incredible quarter with a beat of analysts’ EPS and revenue estimates.
The market seems happy with the results as the stock is up 9.1% since reporting. It currently trades at $169.51.
Is now the time to buy Morgan Stanley? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: Perella Weinberg (NASDAQ: PWP)
Founded in 2006 by veteran investment bankers Joseph Perella and Peter Weinberg during a wave of boutique advisory firm launches, Perella Weinberg Partners (NASDAQ: PWP) is a global independent advisory firm that provides strategic and financial advice to corporations, financial sponsors, and government institutions.
Perella Weinberg reported revenues of $164.6 million, down 40.8% year on year, falling short of analysts’ expectations by 8.4%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue and EPS estimates.
Perella Weinberg delivered the weakest performance against analyst estimates and slowest revenue growth in the group. Interestingly, the stock is up 2.6% since the results and currently trades at $19.36.
Read our full analysis of Perella Weinberg’s results here.
Interactive Brokers (NASDAQ: IBKR)
Founded in 1977 and known for its sophisticated trading technology and global reach across 150+ exchanges in 34 countries, Interactive Brokers (NASDAQ: IBKR) is a global electronic broker that provides low-cost trading and investment services across stocks, options, futures, forex, bonds, and other financial instruments.
Interactive Brokers reported revenues of $1.66 billion, up 21.2% year on year. This result surpassed analysts’ expectations by 8.1%. Overall, it was an exceptional quarter as it also logged an impressive beat of analysts’ revenue estimates and a solid beat of analysts’ EBITDA estimates.
The stock is up 6.1% since reporting and currently trades at $72.68.
Read our full, actionable report on Interactive Brokers here, it’s free for active Edge members.
Houlihan Lokey (NYSE: HLI)
Founded in 1972 and known for its expertise in complex financial situations, Houlihan Lokey (NYSE: HLI) is a global investment bank specializing in mergers and acquisitions, capital markets, financial restructurings, and valuation advisory services.
Houlihan Lokey reported revenues of $659.5 million, up 14.7% year on year. This print topped analysts’ expectations by 1%. It was a strong quarter as it also produced an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ Financial Restructuring segment estimates.
The stock is down 7.8% since reporting and currently trades at $184.42.
Read our full, actionable report on Houlihan Lokey here, it’s free for active Edge members.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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