The Goldman Sachs Group, Inc. GS shares touched an all-time high of $627 during Friday’s trading session before closing the session slightly lower at $625.94.
Over the past year, the stock has soared 66.1% compared with the industry’s growth of 56% and the S&P 500 index rise of 26.4%. GS peers JP Morgan JPM and Morgan Stanley MS have gained 66.7% and 55.8%, respectively, during the same time frame.
Price Performance
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The primary reason for investors’ optimistic stance on Goldman is the impressive fourth-quarter 2024 results (released on Jan.15, 2025). The company registered solid top and bottom-line growth in the reported quarter. Its investment banking (IB) income increased 24% year over year. Driven by a robust performance, the company’s profits jumped 37.5%.
Along with strong quarterly results, the expectations of increased merger and acquisition (M&A) momentum, driven by potential easing regulatory oversight under the Trump administration, will likely support Goldman’s IB business.
Let us delve deeper and analyze other factors to find out whether now is the right time to buy the GS stock or wait for a better entry point.
Global Deal-Making Revival & Less Regulation: The IB industry thrived in 2024, following a rebound in corporate debt, equity issuances and deal-making activities. This supported growth in IB fees.
The macroeconomic environment is steadying, driven by the interest rate-cut cycle globally and robust U.S. economic growth. With this, underwriting and M&A activities are on the path to a sustained recovery in the coming days. Also, the Donald Trump administration is likely to be friendlier toward corporate mergers as the easing of some rules for big banks and more leniency in approving merger deals are expected. This will likely support Goldman’s IB performance.
In 2022 and 2023, GS’s IB revenues declined 47.9% and 15.5% year over year, respectively. However, a substantial improvement in the industry-wide deal value and volume in 2024 drove global M&As. Hence, the company’s IB revenues jumped 24% to $7.73 billion from 2023.
In 2024, Goldman maintained its long-standing rank #1 in announced and completed M&As and ranked third in equity underwriting. With rising M&A deals and underwriting pipelines, the company’s decent IB backlog and leadership position lent it an edge over peers.
GS Efforts to Exit Consumer Business: The company is sharpening its focus on its core strengths in IB and trading while scaling back its consumer banking footprint.
In sync with this, per the Wall Street Journal report, in November 2024, Goldman received an offer from Apple to exit consumer banking. Apple has given GS a proposal to end their consumer banking partnership within the next 12-15 months. If the bank accepts the proposal, the move could affect the two consumer banking products Apple currently offers — the Apple Card and the Apple Savings account.
In October 2024, Goldman finalized a deal to transfer its GM credit card business to Barclays BCS. Barclays will obtain the card program’s receivables from Goldman this year.
In 2024, Goldman completed the sale of GreenSky, its home-improvement lending platform, to a consortium of investors. In 2023, the company sold its Personal Financial Management unit to Creative Planning.
Leveraging its leadership position, extensive operational scale and exceptional talent, Goldman aims to bolster its core businesses and drive growth in areas wherein it has a competitive edge.
Impressive Capital Distribution: The company rewards its shareholders handsomely. In July 2024, it increased its common stock dividend by 9.1% to $3 per share. In the past five years, GS hiked dividends four times, with an annualized growth rate of 24.53%. Currently, its payout ratio sits at 30% of earnings.
Goldman also has a share repurchase plan in place. In February 2023, it announced a share repurchase program, authorizing repurchases of up to $30 billion worth of common stock with no expiration date. At the end of 2024, GS had the remaining $10 billion worth of shares available under authorization.
The company enjoys a strong liquidity position. As of Dec. 31, 2024, cash and cash equivalents were $182 billion. As of the same date, $70 billion were near-term borrowings.
Given its decent liquidity position, the company’s capital distribution activities seem sustainable.
Private Equity Credit Line Expansion: Goldman plans to ramp up its lending services to private equity and asset managers, and aims to expand internationally.
The private equity market has strong growth potential as private equity deals are expected to rise, driven by record-high fundraising. These loans are classified as short-term, typically secured by the assets of borrowing firms. These have fewer risks attached to them. The company’s focus on the private equity market is a strategic fit.
Goldman Asset Management — a unit of GS — intends to expand its private credit portfolio to $300 billion in five years. Once the company strengthens its operations in the United States, it plans to expand its lending business in Europe, the U.K. and Asia.
In January 2025, in order to expand its business in private credit, private equity and other asset classes, and better serve its corporate and investor clients, Goldman unveiled several initiatives. The company is establishing the Capital Solutions Group to expand and integrate its full range of financing, origination, structuring and risk management solution operations in Global Banking & Markets business. To ensure the finest comprehension and implementation of investment sourcing and investing capability, the company will also grow its Asset & Wealth Management unit alternatives investment team.
Goldman’s chief executive, David Solomon, stated, “There is significant demand from our investing clients for private credit and private equity — from investment grade and leveraged lending to hybrid capital and asset-backed finance as well as equity.” He added that the bank would seek to “channel the growing synergies between our clients in global banking and markets and those in asset and wealth management.”
The company’s efforts will enable it to provide clients with access to differentiated sourcing and investing capabilities across opportunities in private credit and private equity.
Goldman Shares Trade at Discount
The GS stock looks attractive from its valuation perspective. The stock is trading at a forward price/earnings (P/E) of 13.72X, a 4.3% discount compared with the industry average of 14.24X.
Price-to-Earnings F12M
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Goldman is also trading at a discount compared with its peer JPM's P/E multiple of 14.63X and MS's P/E multiple of 17.02X.
What Should Investors Do About GS Stock?
Goldman’s efforts to refocus on the IB and trading businesses provide a solid base for growth in the upcoming period. GS's leadership position in announced and completed M&As gives it an edge over its peers. The leniency in approving merger deals under the Trump administration will support its IB business.
The company’s strong liquidity and expansion in the private equity credit line positions it well for growth.
Goldman is expected to deliver strong results in 2025 and 2026.
Sales Estimates
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Earnings Estimates
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Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
Given its favorable long-term prospects and lower valuation, investors might consider investing in Goldman’s stock now. Those who already have the stock in their portfolio can consider holding on to it for robust returns.
GS currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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