In the past month, The Goldman Sachs Group, Inc. GS shares have tanked 12.3% compared with the industry’s decline of 10.2% and the S&P 500 index fall of 5.5%. Meanwhile, its peers JPMorgan JPM and Morgan Stanley MS have lost 9% and 13.1%, respectively, during the same time frame.
Price Performance
Zacks Investment Research
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The GS stock’s decline coincides with mounting concerns about economic health and uncertainties about the impacts of policies being pursued by the Trump administration.
The market is reeling under President Trump's fast-paced trade policy. Trump’s new tariffs on Canada, Mexico and China went into effect on March 4, 2025. Also, he has threatened tariffs on the European Union, and ordered a 25% import tax on steel and aluminum. These tariffs are likely to push up inflation, causing consumer spending to slow down. This is also leading to market uncertainties.
For investment banking (IB) stocks like Goldman, this economic uncertainty can be a negative for merger and acquisition (M&A) deals. Also, rising inflation could cause an uptick in delinquencies if clients have trouble paying their loans.
With mounting concerns about the economic situation, does a decline in GS share price present a perfect buying opportunity before a potential rebound? Let us find out.
GS to Benefit From Deal-Making Revival & Lesser Regulation
The IB industry is thriving following a rebound in corporate debt, equity issuances and deal-making activities. This supported growth in IB fees.
Though Trump’s tariffs are creating a negative market sentiment, GS could get positive tailwinds from a few of the policies. The Trump administration is likely to be friendlier toward corporate mergers, with more leniency expected in approving merger deals. 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 supported the IB business. Hence, the company’s IB revenues jumped 24% to $7.73 billion in 2024 from 2023.
In 2024, Goldman maintained its long-standing rank of being the number one 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.
Goldman’s Efforts to Exit Consumer Business
GS decided to refocus on its core strengths of IB and trading operations, while scaling back its consumer banking footprint.
In November 2024, per the Wall Street Journal report, GS received a proposal from Apple to end their consumer banking partnership within the next 12-15 months. If Goldman accepts the proposal, the move could affect two consumer banking products that 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. Also, last year, Goldman completed the sale of GreenSky — its home-improvement lending platform. In 2023, the company divested its Personal Financial Management unit.
Goldman aims to cease unsecured loan offerings to consumers through its digital consumer banking platform — Marcus. In 2023, it sold substantially all of Marcus’s loan portfolio. These moves are in line with the company’s decision to focus on and grow core businesses, wherein it has showcased encouraging results, given its strong leadership position, wide scale of operations and exceptional talent.
GS’ Efforts to Expand Private Equity Credit Line
Goldman plans to ramp up its lending services to private equity and asset managers, and aims to expand internationally. 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 sync with this, Goldman unveiled several initiatives in January 2025 to expand its business in private credit, private equity and other asset classes, and better serve its corporate and investor clients. 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 the 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.
GS’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 Enjoys Solid Liquidity Position
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.
GS rewards its shareholders handsomely. In July 2024, it increased its common stock dividend 9.1% to $3 per share. In the past five years, the company 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.
Is Now the Perfect Opportunity to Buy GS Stock?
Goldman’s efforts to refocus on the IB and trading businesses provide a solid base for growth in the upcoming period. It is also expected to benefit from leniency in approving merger deals under the Trump administration. Its leadership position in announced and completed M&As gives it an edge over its peers. The company’s strong liquidity position and planned expansion in the private equity credit line position it well for growth.
Per a Reuters report on March 5, 2025, Goldman intends to trim its headcount 3-5% during its annual performance review, potentially leading to more than 1,300 job cuts. The planned reductions follow a series of smaller cuts made during a similar review in September 2024. Goldman's layoff plans are part of a larger strategy to maximize resources and reduce costs while remaining profitable in a volatile market.
Given these favorable factors, GS is expected to deliver strong results.
Sales Estimates
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Earnings Estimates
Zacks Investment Research
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Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
The GS stock looks attractive from a valuation perspective. The stock is trading at a forward price/earnings (P/E) of 11.82X compared with the industry average of 12.71X.
Price-to-Earnings
Zacks Investment Research
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Goldman is also trading at a discount compared with its peers JPM and MS. Currently, JPM and MS have P/E multiples of 13.42X and 13.82X, respectively.
Given GS’s strong long-term prospects, bullish analyst sentiments and inexpensive valuation, investors can consider buying its stock now. Those who already have the stock in their portfolios can hold on to it for robust returns.
GS currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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