Goldman Sachs GS
What does Goldman Sachs do?
Goldman Sachs is a globally active investment bank headquartered in New York that serves corporations, financial institutions, governments and high-net-worth individuals. The business is organized at its core into the Global Banking & Markets and Asset & Wealth Management divisions. The Platform Solutions division, which included consumer offerings, has recently been scaled back significantly.
Revenue arises mainly from advisory and underwriting activities in mergers, acquisitions and equity and bond placements, from trading in equities, bonds, currencies and commodities, and from financing. In addition, there are management fees, income from investments and interest income. Competitively, Goldman Sachs is among the leading names in M&A advisory and capital markets business and competes with other large U.S. banks such as Morgan Stanley, JPMorgan and Bank of America, as well as with European institutions. Its brand, its network of large clients and its trading platform are considered key competitive strengths. Its retail banking business is less significant than that of universal banks.
Score profile
Rank vs. Capital Markets (23 companies). 10 = top of the group, 5 = middle. Calculated from the metrics below, without AI.
Metrics compared with the industry
On profitability and quality, Goldman Sachs ranks in the middle in the group Capital Markets (5.4/10). On growth, the company ranks among the best in the group Capital Markets (8.3/10). On valuation (higher = cheaper), the stock ranks above average in the group Capital Markets (6.1/10). On financial strength, Goldman Sachs ranks in the middle in the group Capital Markets (5.9/10).
| Metric | Stock | Group median | Ranking |
|---|---|---|---|
| Forward P/E | 12.3x | 13.0x | better than 53 % |
| Trailing P/E | 13.1x | 15.9x | better than 66 % |
| PEG ratio | 1.1x | 1.2x | better than 65 % |
| Price/sales | 3.7x | 3.6x | better than 41 % |
| Price/book | 2.5x | 2.7x | better than 65 % |
| Revenue growth | 23.3% | 10.8% | better than 89 % |
| Earnings growth | 38.8% | 10.1% | better than 76 % |
| Gross margin | 81.3% | 91.0% | better than 33 % |
| Operating margin | 38.4% | 22.2% | better than 66 % |
| Net margin | 31.2% | 15.8% | better than 76 % |
| Return on equity | 17.7% | 19.4% | better than 41 % |
| Debt/equity | 756.0% | 141.3% | better than 7 % |
| Current ratio | 1.6x | 1.5x | better than 67 % |
| Free cash flow yield | 0.0% | 0.0% | better than 55 % |
| Dividend yield | 2.2% | 1.8% | – |
| Payout ratio | 25.9% | 22.0% | – |
| Beta | 1.27 | 1.18 | – |
Valuation: what is Goldman Sachs worth?
Two valuation approaches – a discounted cash flow model and a valuation at the industry’s median multiples – give Goldman Sachs a model range of 961.71 USD to 1,002.25 USD per share.
21 analysts, average rating “Buy”, average price target 1,030.67 USD (+13.2%).
The full DCF matrix, the reverse DCF (what growth the price implies) and scenarios are part of the Pro analysis.
What the business depends on
- Capital markets activity determines advisory and underwriting revenue, especially mergers, acquisitions and initial public offerings.
- Trading revenue depends on market volatility, client activity and the risk management of the trading book.
- Recurring fees on assets under management stabilize earnings and depend on market performance and net inflows.
Risks
- Earnings fluctuate strongly with the economy and market sentiment, as deal and trading activity are cyclical.
- Losses from trading positions, credit exposures or investments can significantly weigh on results in the short term.
- Strict regulation, capital requirements and legal and reputational risks can limit operating flexibility and profitability.
What to look for with Goldman Sachs
Return on equity relative to book value per share is informative because it shows how efficiently the bank deploys its capital in a cyclical business.