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Cramer Shocked by Goldman Sachs Revelation

After poring through the latest earnings release from Goldman Sachs, Cramer was nothing short of shocked.

"Goldman Sachs dazzled," said an awed Jim Cramer. "I was truly shocked at how much money was made by equities, fixed income and commodities. Goldman has a return on equity of 15%, much much higher than people thought."

By the numbers, earnings excluding items jumped to $5.60 per share from $1.84 a share in the year-earlier period, with net revenues improving to $9.24 billion from $6.05 billion a year ago. The bank saw net earnings of $2.89 billion in the quarter, with an annualized return on equity of 16.5 percent


But that's not all.

"Goldman Sachs had a remarkable decline in compensation costs. The shareholders are getting the incremental gains now, not the people who work at Goldman, as the ratio of compensation and benefits to net revenues was 37.9%, compared to 42% the year before."

"That's shocking!" Cramer said again. The Mad Money host just couldn't contain himself – or be more impressed.

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Jin Lee | Bloomberg | Getty Images

"These gains are not about a hedge fund that's dressed up as a bank, an accusation that used to get thrown at Goldman all the time. No, the gains are about regular business lines making a huge amount of money."

All told, Cramer sees upside.

"Tangible book value is now $134 per share, and this company once again deserves to sell at a 20% premium to tangible book like the old days. In short, I can see Goldman going to the 160s on this quarter."

Wait, there's more.

Results from JPMorgan suggest to Cramer that Goldman isn't just a single stock story – in fact, he thinks a trend may be underway in the sector. "JPMorgan did incredible numbers, too. Almost every single line but one, the net interest margin, was blow-away good," Cramer said.

What's the takeaway?

"More than a century ago, the German philosopher and stock sage Friedrich Nietzsche predicted that one day, there would be a re-valuation of all values. And after these earnings, I'm thinking Nietzsche was right, at least when it comes to the bank stocks, because the days of the radical re-valuation of banks are now upon us."

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