Key takeaways
View moreGoldman Sachs appears moderately overvalued based on its high P/E ratio (36.08) compared to industry averages, and its elevated Enterprise Value to Sales ratio (5.74). While the company demonstrates strong profitability and growth prospects, these seem to be more than accounted for in the current valuation. The high debt-to-equity ratio and ongoing regulatory risks further support a more conservative valuation.
- Goldman Sachs' net profit margin of 18.35% significantly exceeds the industry average of 4.97%, indicating superior profitability, but this is offset by a high debt-to-equity ratio of 535.48 compared to the industry average of 154.40.
- The company's strategic focus on Global Banking & Markets and Asset & Wealth Management is evident in the increasing interest income and record assets under supervision of $3.2 trillion.
- GS's current ratio of 1.49 is below the industry average of 3.33, signaling potential liquidity concerns, although it is trending upwards.
- Investment in technology and AI is a key strategic initiative to enhance client experience and improve efficiency, as highlighted in the earnings call.
- Recent market volatility, as noted in the earnings call, presents both opportunities for trading revenue and risks to deal flow and client activity.
- Legal and regulatory risks, including the 1MDB investigation, continue to pose potential liabilities and reputational risks for the firm, as detailed in SEC filings.
- GS has underperformed JPM but outperformed MS in terms of historical performance, with a moderate risk profile compared to its peers.
- Management anticipates high single-digit annual growth in durable revenues and expects a full-year tax rate of approximately 21%.
- The stock price has shown a downward trend from February 19, 2025, to April 17, 2025, decreasing from $664.85 to $509.49.
- The company's future performance hinges on effectively managing its high leverage, navigating regulatory challenges, and capitalizing on growth opportunities in its core business segments.
Evaluation summary
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Company Overview:
- The Goldman Sachs Group, Inc. (GS) is a global financial institution providing a range of services including investment banking, market-making, asset management, and wealth management. The company operates through three segments: Global Banking and Markets, Asset and Wealth Management, and Platform Solutions.
- The Global Banking and Markets segment includes investment banking, global investments, and equity and debt investments. The Asset and Wealth Management segment relates to the direct-to-consumer banking business which includes lending, deposit-taking, and investing. The Platform Solutions segment includes consumer platforms such as partnerships offering credit cards and point-of-sale financing, and transaction banking.
- For comparative analysis, the Financial Select Sector SPDR Fund (XLF) is used as a benchmark, and JPMorgan Chase & Co. (JPM) and Morgan Stanley (MS) are used as industry peers.
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Financial Performance:
- Goldman Sachs reported a consolidated net income of $4.738 billion for the quarter ending March 31, 2025, compared to $4.111 billion for the quarter ending December 31, 2024.
- Interest income has been a primary driver of revenue growth, increasing from $19.954 billion in Q4 2024 to $19.383 billion in Q1 2025. Total interest expense decreased from $17.609 billion to $16.488 billion over the same period, contributing to a higher net interest income.
- The net profit margin for the quarter ending March 31, 2025, was 18.35%, significantly higher than the industry average of 4.97%. This indicates strong profitability compared to its peers. The net profit margin has increased from 12.95% in Q4 2024 to 18.35% in Q1 2025.
- Return on Average Assets (ROA) for the quarter ending March 31, 2025, was 0.86%, lower than the industry average of 1.98%, suggesting less efficient asset utilization compared to peers. Return on Average Total Equity was 12.27%, slightly higher than the industry average of 11.12%, indicating a good return on shareholders' investments.
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Operational Efficiency:
- Total assets increased from $1.676 trillion as of December 31, 2024, to $1.766 trillion as of March 31, 2025. Total liabilities also increased from $1.554 trillion to $1.642 trillion during the same period.
- Working capital management can be assessed by looking at the current ratio, which increased from 1.08 as of December 31, 2024, to 1.49 as of March 31, 2025, indicating improved liquidity.
- Net operating cash flow decreased from $30.817 billion in Q4 2024 to $20.739 billion in Q1 2025.
- Free cash flow to equity decreased from $30.351 billion in Q4 2024 to $20.153 billion in Q1 2025. The free cash flow margin decreased from 0.97 in Q4 2024 to 0.63 in Q1 2025.
- The company paid cash dividends of $1.153 billion in Q1 2025, slightly less than the $1.169 billion paid in Q4 2024.
- The total debt to total equity ratio was 535.48 as of March 31, 2025, significantly higher than the industry average of 154.40, indicating higher financial leverage.
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Growth Opportunities:
- Goldman Sachs is focusing on growing its Asset & Wealth Management segment, with assets under supervision reaching a record $3.2 trillion, as mentioned in the earnings call.
- The firm raised another $19 billion in alternatives during the quarter, bringing the total since 2019 to $342 billion, with new flagship funds launched across various strategies.
- Wealth Management revenue grew 11% year-over-year to $2.2 billion, with client assets reaching $1.6 trillion, supported by over 1,000 private wealth advisors.
- Goldman Sachs is investing in technology and automation, including AI solutions, to enhance client experience, improve efficiency, and scale engineering capabilities.
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Recent Developments and Market Sentiment:
- The earnings call on April 14, 2025, highlighted that market volatility is a double-edged sword, driving strong trading revenues but potentially impacting future deal flow.
- The firm's commitment to returning capital to shareholders is evident through the increased buyback program.
- Alternatives are a key growth driver, but fee rate pressures and market conditions pose challenges.
- Potential regulatory reforms could significantly impact the firm's capital position and ability to deploy capital.
- Management expressed concerns about near-term and longer-term uncertainty impacting client decisions.
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Risks and Threats:
- Key risks include market risk, credit risk, operational risk, cybersecurity risk, compliance risk, and regulatory risk, as detailed in the SEC filings.
- The high debt-to-equity ratio of 535.48 is a potential area of concern, indicating higher financial risk.
- Reliance on interest income as the primary revenue driver may expose the company to interest rate risk.
- Legal and regulatory matters, such as the 1MDB investigation, continue to be a source of potential liability and reputational risk for the firm.
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Valuation Analysis:
- The Enterprise Value to Sales ratio for the quarter ending March 31, 2025, was 5.74, higher than the industry average of 4.26.
- The earnings call highlighted that the firm's efficiency ratio was 60.6%. The compensation ratio, net of provisions, was 33%.
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Price Performance:
- The stock price has shown volatility in the period from February 19, 2025, to April 17, 2025, with a general downward trend. The price decreased from $664.85 on February 19, 2025, to $509.49 on April 17, 2025.
- Year-to-date, GS has underperformed the Financial Select Sector SPDR Fund (XLF), with returns of -10.95% and -2.88%, respectively.
- GS has underperformed JPM but outperformed MS year-to-date.
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Future Outlook:
- Management expects a full-year tax rate of approximately 21%, as mentioned in the earnings call.
- They anticipate high single-digit annual growth in durable revenues (management and other fees, and private banking and lending).
- Fundraising for alternatives is expected to be in line with recent years, though market conditions could impact this.
- The economic outlook has shifted, with expectations for US growth falling and recession prospects increasing.
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Summary:
- Goldman Sachs exhibits strong profitability, driven by increasing interest income and effective expense management. However, the company faces challenges related to high leverage, lower liquidity compared to industry peers, and regulatory risks.
- Strengths: Strong profitability, strategic focus on core business segments, investments in technology and automation.
- Weaknesses: High debt-to-equity ratio, lower liquidity compared to industry peers.
- Opportunities: Growth in Asset & Wealth Management, fundraising for alternatives, expansion of wealth management services.
- Threats: Market volatility, regulatory risks, legal matters, economic slowdown.
- Overall, Goldman Sachs presents a mixed investment profile. The company's strong profitability and strategic initiatives are counterbalanced by its high leverage and regulatory risks. Investors should carefully consider their risk tolerance and investment horizon when evaluating GS. The company's future performance will depend on its ability to manage these risks effectively and capitalize on growth opportunities in its core business segments.
Price history
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Fundamentals
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Insights
- Goldman Sachs exhibits strong profitability, with a net profit margin significantly higher than the industry average, driven by increasing interest income and effective expense management.
- The company's high debt-to-equity ratio poses a solvency risk, indicating a reliance on debt financing that requires careful monitoring and management.
- While the current ratio is below the industry average, the increasing trend suggests improving short-term financial health, but liquidity remains a concern.
- Strategic decisions to focus on core institutional and wealth management operations are reflected in the increasing interest income and stable non-interest expenses.
- The company should prioritize improving its liquidity position and managing its debt levels to ensure long-term financial stability and mitigate potential risks.
Analysis
- Revenue
- Interest income is the primary driver of revenue growth, showing a strong increasing trend.
- Non-interest income is decreasing, potentially due to strategic shifts in business segments.
- The company's focus on core institutional and wealth management operations is reflected in the increasing interest income.
- Profitability
- Net profit margin is significantly higher than the industry average and shows an increasing trend, indicating strong and improving profitability.
- Return on Average Assets is lower than the industry average, suggesting less efficient asset utilization compared to peers, but it is on an increasing trend.
- Return on Average Total Equity is slightly higher than the industry average, indicating a good return on shareholders' investments, with an increasing trend.
- Liquidity
- The current ratio is lower than the industry average, indicating lower liquidity compared to peers, but it is on an increasing trend.
- The company may face challenges in meeting short-term obligations compared to its peers.
- Solvency
- The total debt to total equity ratio is significantly higher than the industry average, indicating higher financial leverage and risk.
- The company relies heavily on debt financing, which could pose risks if not managed effectively.
- Operational Efficiency
- Increasing net loans suggest efficient asset utilization in lending activities.
- Stable non-interest expenses contribute to better operating income.
- Cash Flow Analysis
- No items have recent data.
- Risk Factors
- High debt-to-equity ratio is a potential area of concern, indicating higher financial risk.
- Reliance on interest income as the primary revenue driver may expose the company to interest rate risk.
- Future Outlook
- Continued growth in interest income is expected, driven by lending activities.
- Net profit margin is likely to remain strong, supported by effective expense management.
- The company should focus on improving its liquidity position and managing its debt levels to mitigate financial risks.
- Profitability
Financial statements
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Public filings
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- Goldman Sachs has strategically narrowed its focus on consumer-related activities, selling off several business lines to concentrate on its core institutional and wealth management operations.
- The firm faces a range of risks, including market, credit, operational, cybersecurity, compliance, and regulatory risks, which it actively manages through its risk management framework and governance structure.
- Legal and regulatory matters, such as the 1MDB investigation and various underwriting-related lawsuits, continue to be a source of potential liability and reputational risk for the firm.
- Goldman Sachs has maintained strong capital and liquidity positions, which has enabled it to navigate evolving market conditions and regulatory requirements.
- The firm's financial performance has been mixed, with higher net revenues offset by changes in provision for credit losses and operating expenses, as it adapts its business model to the current environment.
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Core Business and Operations:
- Goldman Sachs is a leading global financial institution that delivers a broad range of financial services to a large and diversified client base, including corporations, financial institutions, governments, and individuals.
- The firm operates in three main business segments: Global Banking & Markets, Asset & Wealth Management, and Platform Solutions.
- Global Banking & Markets provides investment banking, market-making, and lending services. Asset & Wealth Management provides investment management and wealth advisory services. Platform Solutions includes the firm's consumer platforms and transaction banking activities.
- The firm's key competitors include other large financial institutions, investment banks, asset managers, and fintech companies.
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Industry and Market Trends:
- The firm operates in a highly regulated environment and is subject to various laws, rules, and regulations globally.
- The firm faces competition from other financial institutions and is impacted by macroeconomic conditions, market volatility, interest rates, and other external factors.
- Regulatory changes, such as the implementation of Basel III capital requirements, have significantly altered the regulatory framework within which the firm operates.
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Recent Events:
- The firm has made a strategic decision to narrow its focus on consumer-related activities, including the sale of the Marcus loans portfolio, the PFM business, and the GreenSky installment loan portfolio.
- The firm entered into an agreement with General Motors regarding the transition of the GM credit card program to another issuer.
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Risk Factors:
- Key risks include market risk, credit risk, operational risk, cybersecurity risk, compliance risk, and regulatory risk.
- The firm also faces risks related to its capital adequacy, liquidity management, and the potential impact of macroeconomic conditions, geopolitical events, and changes in laws and regulations.
- Legal and regulatory matters, such as the 1MDB investigation and various underwriting-related lawsuits, continue to be a source of potential liability and reputational risk for the firm.
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Legal Matters:
- The firm is involved in various legal proceedings, including investigations, lawsuits, and regulatory actions related to its business activities, such as 1MDB-related matters, mortgage-related matters, currencies-related litigation, and underwriting litigation.
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Management's Discussion and Analysis:
- The firm's financial performance has been impacted by higher net revenues, particularly in Global Banking & Markets and Asset & Wealth Management, as well as changes in provision for credit losses and operating expenses.
- The firm has maintained strong capital and liquidity positions, with a focus on managing risks and adapting to changing market conditions.
Earnings calls
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Earnings Report 2025Q1 (2025-04-14)
Key takeaways
- Market Volatility is a Double-Edged Sword: While volatility drove strong trading revenues in Q1, the increased uncertainty could negatively impact future deal flow and client activity.
- Capital Return Remains a Priority: The firm's commitment to returning capital to shareholders is evident through the increased buyback program, but regulatory changes could further amplify this.
- Alternatives are a Key Growth Driver: Continued fundraising success in alternatives highlights the importance of this segment, but fee rate pressures and market conditions pose challenges.
- Cost Management is Crucial: The ongoing efficiency plan is essential for maintaining profitability in a potentially slowing economic environment.
- Regulatory Landscape is a Key Uncertainty: Potential regulatory reforms could significantly impact the firm's capital position and ability to deploy capital.
- Global Franchise Provides Resilience: The firm's diversified global franchise helps mitigate risks associated with regional economic slowdowns or policy changes.
Focus of management’s prepared remarks
- Strong First Quarter Performance: Goldman Sachs reported robust results, including net revenues of $15.1 billion, EPS of $14.12, and an ROE of 16.9%, driven by its global franchise and risk management.
- Global Banking & Markets Strength: Ongoing policy uncertainty and market volatility drove client activity in FICC and equities, highlighting the firm's intermediation and financing capabilities.
- Investment Banking Leadership: Despite muted activity, Goldman Sachs maintained its position as the number one M&A advisor globally, with an increased backlog for the fourth consecutive quarter.
- Asset & Wealth Management Growth: Assets under supervision reached a record $3.2 trillion, with 29 consecutive quarters of long-term fee-based net inflows, driven by alternatives, wealth management, and solutions.
- Alternatives Fundraising Success: The firm raised another $19 billion in alternatives during the quarter, bringing the total since 2019 to $342 billion, with new flagship funds launched across various strategies.
- Wealth Management Expansion: Wealth Management revenue grew 11% year-over-year to $2.2 billion, with client assets reaching $1.6 trillion, supported by over 1,000 private wealth advisors.
- Technology and AI Investments: Goldman Sachs is investing in technology and automation, including AI solutions, to enhance client experience, improve efficiency, and scale engineering capabilities.
- Macroeconomic Concerns: The firm's economists have lowered US growth expectations, and the prospect of a recession has increased, with clients concerned about near-term and longer-term uncertainty.
- Capital and Regulation: Management appreciates the administration's focus on appropriately calibrating regulation for the financial services industry and hopes to see progress across capital, leverage, liquidity, and supervision.
Focus of the analyst Q&A
- Impact of Deleveraging on Financing:
- Concerns about the short-term impacts on financing revenue due to deleveraging in early April.
- Questions about the materiality of the impact of deleveraging on financing revenue.
- Market Activity Post-April 2nd:
- Concerns about a potential cliff-drop in market activity and its negative impact on financing and trading revenues after April 2nd.
- Seeking data or context on the negativity of the last 10 days of the quarter.
- Efficiency Plan and Headcount Management:
- Inquiries about the execution of the three-year efficiency plan and its impact on the pyramid structure.
- Questions about potential severance charges related to headcount management.
- Competitive Landscape in Markets Businesses:
- Concerns about Goldman Sachs' performance lagging peers in the markets businesses during the quarter.
- Seeking insights into the current competitive landscape in markets.
- Sustainability of Buyback Levels:
- Questions about the catalyst behind the increased buyback in the quarter and its sustainability going forward.
- Impact of Regulatory Changes on Capital:
- Inquiries about the potential benefits of SLR ratio changes, particularly removing treasuries from the denominator.
- Seeking insights into how the firm plans to use improvements in capital as they come through.
- Value-at-Risk (VaR) Dynamics:
- Questions about the factors influencing VaR and how volatility impacts VaR efficiency.
- Capital Freed Up from Disposals:
- Seeking specific estimates on the amount of capital that could be freed up from disposing of private investments and credit cards.
- Outlook for Sponsor Activity in Alternatives:
- Concerns about the outlook for sponsor activity given headwinds to realization activity and heightened macro uncertainty.
- Risks to Deal Backlog:
- Seeking insights into potential risks to the deal backlog, considering international and cross-border factors and specific sector challenges.
- Sponsor Fundraising and Capital Returns:
- Questions about conversations with sponsors and fundraising dynamics, considering pressure to return capital.
- Debt Underwriting Outlook:
- Seeking insights into the cyclicality and drivers of results in debt underwriting, as well as the outlook from here.
- RWA Progression and Balance Sheet Optimization:
- Questions about balance sheet management and factors influencing RWA progression.
- Impact of Policy Volatility on International Revenues:
- Seeking management's perspective on how policy volatility impacts internationally sourced revenues.
Summary
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Financial Performance
Goldman Sachs reported a strong first quarter with net revenues of $15.1 billion, earnings per share of $14.12, an ROE of 16.9%, and an ROTE of 18%. These results reflect a dynamic market environment and the firm's ability to capitalize on client activity. Selected items reduced EPS by $0.25 and ROE by 30 basis points.
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Revenue Drivers
Global Banking & Markets was a significant revenue driver, producing $10.7 billion in revenues. FICC and Equities businesses benefited from increased client activity due to market volatility. Investment Banking saw muted activity, but the backlog increased. Asset & Wealth Management's revenues were $3.7 billion, driven by management and other fees, and private banking and lending. Record FICC and Equities financing revenues of $2.7 billion also contributed significantly.
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Profit Margins and Cost Management
The firm's efficiency ratio was 60.6%. The compensation ratio, net of provisions, was 33%. A three-year efficiency plan is underway, focusing on technology investments and pyramid structure adjustments. AWM generated a 21% pre-tax margin and roughly 10% ROE.
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Guidance and Outlook
Management expects a full-year tax rate of approximately 21%. They anticipate high single-digit annual growth in durable revenues (management and other fees, and private banking and lending). Fundraising for alternatives is expected to be in line with recent years, though market conditions could impact this. The economic outlook has shifted, with expectations for US growth falling and recession prospects increasing.
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Strategic Initiatives
The firm is investing in technology and automation, including AI solutions, to enhance client experience and improve efficiency. They are focused on scaling the wealth management franchise and growing alternatives. A multi-year share repurchase program of up to $40 billion was authorized.
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Management Commentary
Management emphasized the importance of a scaled global franchise, deep risk management, and strong talent. They highlighted the firm's ability to deliver strong results in various market environments. They expressed concerns about near-term and longer-term uncertainty impacting client decisions. They are optimistic about potential regulatory reforms.
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Industry and Market Conditions
The market backdrop shifted significantly during the quarter, with increased volatility and uncertainty. Clients are concerned about trade war risks and economic slowing. Management noted the importance of appropriately calibrating regulation for the financial services industry. They acknowledged the benefits the US has derived from the post-World War II economic order.
Comparative analysis
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Benchmarks (as of 2025-04-17)
Financial Select Sector SPDR Fund (XLF)
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Performance Comparison:
- The Goldman Sachs Group, Inc. (GS) has shown mixed performance compared to the Financial Select Sector SPDR Fund (XLF). Over the past year, GS has outperformed XLF with a return of 24.77% versus 15.92%. However, year-to-date, GS has underperformed XLF, with returns of -10.95% and -2.88% respectively. This suggests that while GS has delivered stronger returns over a longer period, it has struggled more recently.
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Risk and Return Analysis:
- The annualized returns for GS over the past one, two, and three years have been higher than those of XLF. For example, the three-year annualized return for GS is 17.41%, compared to 9.16% for XLF. This indicates that GS has provided higher returns on average.
- However, GS has also exhibited higher annualized volatility compared to XLF. In Q4 2024, GS's volatility ranged from 18.66% to 44.25%, while XLF's ranged from 11.63% to 22.84%. This suggests that GS's returns come with greater risk.
- The maximum drawdown for GS was -32.84% on 2022-06-17, which is larger than the maximum drawdown for XLF of -25.81% on 2022-10-12. This indicates that GS is more prone to significant declines from its peak.
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Risk-Adjusted Performance:
- The Sharpe Ratio, which measures risk-adjusted return, has generally been lower for GS compared to XLF. In Q2 2025, the Sharpe ratio for GS was 0.61, while for XLF it was 0.46. This suggests that XLF has offered better risk-adjusted returns over certain periods.
- The Beta value for GS has generally been around or above 1, while the Beta for XLF has generally been below 1. As of Q2 2025, GS has a beta of 1.31 and XLF has a beta of 0.79. This indicates that GS is more sensitive to market movements than XLF.
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Overall Assessment:
- The Goldman Sachs Group, Inc. (GS) has demonstrated higher return potential but also higher risk compared to the Financial Select Sector SPDR Fund (XLF). While GS has outperformed XLF over the past one to three years, its recent underperformance and higher volatility suggest that it may be a riskier investment. The lower Sharpe Ratio for GS further supports this conclusion, indicating that XLF has provided better risk-adjusted returns. Investors should consider their risk tolerance and investment horizon when choosing between GS and XLF.
Peers Price History(as of 2025-04-17)
- Performance Comparison:
- The Goldman Sachs Group, Inc. (GS) has shown mixed performance compared to its peers, JPMorgan Chase & Co. (JPM) and Morgan Stanley (MS). Year-to-date, GS has underperformed JPM but outperformed MS. Over longer periods like 2 and 3 years, GS has significantly underperformed JPM but outperformed MS. For example, over the past 3 years, GS returned 61.87% compared to JPM's 91.35% and MS's 34.24%.
- Risk and Return Analysis:
- The annualized returns show that GS has provided lower returns than JPM but higher returns than MS over 2 and 3-year periods. For instance, the 3-year annualized return for GS is 17.41%, while JPM is 24.15% and MS is 10.31%.
- In terms of annualized volatility, GS's volatility has generally been between that of JPM and MS. Reviewing the most recent data from Q1 2025, GS's volatility ranged from 19.15% to 61.88%, JPM's ranged from 14.43% to 48.91%, and MS's ranged from 22.73% to 63.7%.
- The maximum drawdown for GS was -32.84% on 2022-06-17, which is less than JPM's -38.77% on 2022-10-11 but similar to MS's -32.38% on 2022-06-17. This suggests that GS's risk profile is moderate compared to its peers.
- Risk-Adjusted Performance:
- The Sharpe Ratio for GS has generally been lower than JPM, indicating that JPM offers better risk-adjusted returns. MS often had negative Sharpe ratios, suggesting poorer risk-adjusted performance compared to GS.
- GS's beta has generally been around 1, indicating that its sensitivity to market movements is similar to the market average. JPM's beta has been consistently below 1, suggesting lower sensitivity, while MS's beta has been consistently above 1, indicating higher sensitivity.
- Overall Assessment:
- GS has shown mixed performance compared to its peers. While it has outperformed MS in terms of historical performance and annualized returns, it has consistently underperformed JPM. GS's risk profile, as indicated by its volatility, drawdown, and beta, is moderate compared to JPM (less risky) and MS (more risky). JPM appears to offer better risk-adjusted returns based on its higher Sharpe Ratio.
- A significant trend is the recent decrease in Sharpe ratios for all three companies, indicating a potential shift in market conditions or increased risk. Additionally, the increasing volatility in Q4 2024 and Q1 2025 suggests a period of heightened uncertainty.
Peers Fundamentals(as of 2025-03-31)
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Market Position and Size:
- The Goldman Sachs Group, Inc. (GS) has a market capitalization of $158,344.59 million, which is significantly smaller than JPMorgan Chase & Co. (JPM) at $645,543.82 million and Morgan Stanley (MS) at $176,091.57 million.
- GS's revenue for the most recent quarter is $120,090 million, which is less than JPM's $285,106 million but greater than MS's $106,386 million. Its net income of $14,882 million is also less than JPM's $59,358 million but greater than MS's $14,293 million.
- Despite having lower market capitalization than its peers, GS generates more revenue and net income than Morgan Stanley, indicating a substantial operational scale.
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Profitability and Efficiency:
- GS's net profit margin is 12.39%, which is less than JPM's 20.82% and MS's 13.44%. However, it is significantly greater than the industry average of 4.97%.
- GS's Return on Average Assets (ROAA) is 0.86%, which is less than JPM's 1.41%, MS's 1.13%, and the industry average of 1.98%.
- GS's Return on Average Total Equity (ROAE) is 12.27%, which is less than JPM's 17.25% and MS's 13.88%, but greater than the industry average of 11.12%.
- GS's Return on Average Total Capital is 1.73%, which is less than JPM's 6.5%, MS's 3.26%, and the industry average of 11%.
- GS's Return On Average Invested Capital is 4.12%, which is less than JPM's 7.77% and the industry average of 6.41%, but greater than MS's 3.69%.
- GS demonstrates strong profitability with a net profit margin above the industry average, but its efficiency in generating returns on assets and capital lags behind its peers and the industry average.
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Financial Health and Stability:
- GS's Current Ratio is 1.49, which is equal to JPM's and less than the industry average of 3.33, indicating a lower liquidity position compared to the industry average.
- GS's Total Debt to Total Equity Ratio is 535.48, which is significantly greater than JPM's 286.05, MS's 299.55, and the industry average of 154.4, suggesting a heavier reliance on debt financing compared to its peers and industry norms.
- GS's high debt levels and lower liquidity position raise concerns about its financial stability compared to its peers and the industry average.
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Valuation and Market Perception:
- GS's Enterprise Value To Sales is 5.74, which is less than JPM's 5.95 but greater than MS's 4.85 and the industry average of 4.26.
- GS's Price To Earnings is 11.82, which is greater than JPM's 11.39 but less than MS's 12.81 and the industry average of 32.03.
- GS's Price to Book Ratio is 1.48, which is less than JPM's 1.95, MS's 1.81, and the industry average of 4.07.
- GS's Price To Sales Ratio is 1.38, which is less than JPM's 2.3 and MS's 1.64, and the industry average of 4.02.
- GS appears undervalued compared to the industry average based on P/E, P/B, and P/S ratios, but its EV/Sales is higher than the industry average, indicating mixed market perception.
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Cash Flow and Capital Management:
- The provided data does not include Net Operating Cash Flow, Total Capital Expenditure, or Free Cash Flow for GS or its peers, making it impossible to evaluate GS's cash flow generation strength and capital allocation strategies.
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Growth and Future Prospect:
- GS shows consistently higher growth in Net Income and Basic Earnings per Share compared to the peer group average.
- GS's Free Cash Flow and Free Cash Flow Margin have significant year-to-year fluctuations, as indicated by the high standard deviations.
- GS's 3-year CAGR for Sales/Revenue is 27.53%, while its 5-year CAGR is 17.71%, resulting in a 9.82% difference. This difference is similar to the peer group average difference of 10.43%. GS's 5-year CAGR for Net Income is 14.91%, while its 3-year CAGR is -7.39%, resulting in a -22.3% difference. This difference is more negative than the peer group average difference of -12.32%.
- GS's growth is concentrated in Net Income and Basic Earnings per Share, while other metrics like Sales/Revenue and Free Cash Flow show lower or more volatile growth.
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Potential for Investment:
- GS presents a mixed investment profile. Its high earnings per share and strong profitability are attractive, but its high debt levels and lower returns on assets and capital are concerning.
- The company's growth potential, particularly in net income and earnings per share, is promising, but its smaller market capitalization compared to peers suggests that the market has reservations about its long-term prospects.
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Key Risks and Considerations:
- GS's high debt levels pose a significant risk, potentially limiting its financial flexibility and increasing its vulnerability to economic downturns.
- The company's lower returns on assets and capital compared to peers raise concerns about its operational efficiency and ability to generate sustainable returns.
- The market's undervaluation of GS compared to the industry average suggests potential risks or uncertainties that investors should carefully consider.
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Overall Assessment:
- GS's overall financial position is characterized by strong profitability and earnings per share, but its high debt levels and lower returns on assets and capital raise concerns about its financial stability and efficiency.
- While its growth in net income and earnings per share is promising, its smaller market capitalization compared to peers suggests that the market has reservations about its long-term prospects.
- GS's future success will depend on its ability to manage its debt levels, improve its operational efficiency, and convince the market of its long-term growth potential.
Comparison metrics
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