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Goldman Stock Soars 72% in a Year: Is It Worth Considering Now?
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In the past year, The Goldman Sachs Group, Inc. (GS - Free Report) shares jumped 72%, outperforming the industry’s growth of 55.7% and the S&P 500 index rise of 24.3%. Further, the stock has fared better than its JPMorgan (JPM - Free Report) and Morgan Stanley (MS - Free Report) , which gained 56.4% and 66.2%, respectively, during the same time frame.
Price Performance
Image Source: Zacks Investment Research
Also, the GS stock is trading just 2.2% below its 52-week high of $663.87 touched on Feb. 7, 2025.
Now, let us delve deeper and analyze the factors to find out whether now is the correct time to buy the GS stock or wait for a better entry point.
How Trump 2.0 Policy & Tariff Plan Affect Goldman?
The Trump administration’s several policy decisions, including tariffs on Mexico and Canada, tax cuts, deregulations, and the ‘America First’ vision, will have direct and indirect effects on Goldman’s operations.
On Thursday, Trump has signed a memo instructing staff to develop reciprocal tariffs on countries taxing U.S. imports, including China, Japan, South Korea, and the European Union. This move is part of his effort to boost manufacturing and attract investment. The Trump administration has also ordered a 25% import tax on steel and aluminum, raised tariffs on China, and threatened 25% duties on Canada and Mexico.
The new administration will likely implement a more lenient approach toward deal-making, signaling the end of an era, marked by prolonged regulatory scrutiny. This, along with a favorable interest rate environment, strong economic growth and a solid deal pipeline, set the stage for a revitalized IB business this year. Against this backdrop, GS is well-poised to remain at the forefront as capital markets activity experiences a notable resurgence.
The IB industry thrived in 2024, following a rebound in corporate debt, equity issuances and deal-making activities. 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 2024 IB revenues jumped 24% year over year to $7.73 billion.
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
Goldman decided to refocus on its core strengths of IB and trading operations while scaling back its consumer banking footprint.
Per the Wall Street Journal report, Goldman received an offer in November 2024 from Apple to way out of consumer banking. Apple has given Goldman 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. 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 the fourth quarter of 2023, Goldman sold its Personal Financial Management unit to Creative Planning.
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.
Solid Liquidity Position to Aid Capital Distributions
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, 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.
GS’ Efforts to Expand Private Equity Credit Line
Goldman plans to ramp up its lending services to private equity and asset managers with an aim 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 sync with this, Goldman announced several initiatives in January 2025 to better serve its corporate and investor clients, and grow its business in private credit, private equity and other asset classes.
To extend and unify its whole suite of financing, origination, structuring and risk management solution activities within the Global Banking & Markets business, the company is forming the Capital Solutions Group. The business will also expand its Asset & Wealth Management unit alternatives investment team to guarantee the best understanding and application of investment sourcing and investing capacity.
On Feb. 11, at UBS financial services conference in Miami, Goldman’s CEO David Solomon stated that the GS is considering acquisitions in asset and wealth management but would be highly selective about any deal. "If we could find things that could accelerate our asset and wealth management journey, we would consider them," he stated.
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.
Is Now the Perfect Opportunity to Buy Goldman Stock?
GS’s efforts to refocus on the IB and trading businesses provide a solid base for growth in the upcoming period. 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.
Given these favorable factors, Goldman is expected to deliver strong results.
Sales Estimates
Image Source: Zacks Investment Research
Earnings Estimates
Image Source: Zacks Investment Research
Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
The GS stock also looks attractive from a valuation perspective. The stock is trading at a forward price/earnings (P/E) of 13.60X, a 5.8% discount compared with the industry average of 14.43X.
Price-to-Earnings F12M
Image Source: Zacks Investment Research
Goldman is also trading at a discount compared with its peer JPM's P/E multiple of 15.16X and MS's P/E multiple of 15.80X.
Given its strong long-term prospects and inexpensive valuation, investors can consider buying Goldman’s stock now. Those who already have the stock in their portfolios can hold on to it for robust returns.
Image: Bigstock
Goldman Stock Soars 72% in a Year: Is It Worth Considering Now?
In the past year, The Goldman Sachs Group, Inc. (GS - Free Report) shares jumped 72%, outperforming the industry’s growth of 55.7% and the S&P 500 index rise of 24.3%. Further, the stock has fared better than its JPMorgan (JPM - Free Report) and Morgan Stanley (MS - Free Report) , which gained 56.4% and 66.2%, respectively, during the same time frame.
Price Performance
Also, the GS stock is trading just 2.2% below its 52-week high of $663.87 touched on Feb. 7, 2025.
Now, let us delve deeper and analyze the factors to find out whether now is the correct time to buy the GS stock or wait for a better entry point.
How Trump 2.0 Policy & Tariff Plan Affect Goldman?
The Trump administration’s several policy decisions, including tariffs on Mexico and Canada, tax cuts, deregulations, and the ‘America First’ vision, will have direct and indirect effects on Goldman’s operations.
On Thursday, Trump has signed a memo instructing staff to develop reciprocal tariffs on countries taxing U.S. imports, including China, Japan, South Korea, and the European Union. This move is part of his effort to boost manufacturing and attract investment. The Trump administration has also ordered a 25% import tax on steel and aluminum, raised tariffs on China, and threatened 25% duties on Canada and Mexico.
The new administration will likely implement a more lenient approach toward deal-making, signaling the end of an era, marked by prolonged regulatory scrutiny. This, along with a favorable interest rate environment, strong economic growth and a solid deal pipeline, set the stage for a revitalized IB business this year. Against this backdrop, GS is well-poised to remain at the forefront as capital markets activity experiences a notable resurgence.
The IB industry thrived in 2024, following a rebound in corporate debt, equity issuances and deal-making activities. 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 2024 IB revenues jumped 24% year over year to $7.73 billion.
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
Goldman decided to refocus on its core strengths of IB and trading operations while scaling back its consumer banking footprint.
Per the Wall Street Journal report, Goldman received an offer in November 2024 from Apple to way out of consumer banking. Apple has given Goldman 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. 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 the fourth quarter of 2023, Goldman sold its Personal Financial Management unit to Creative Planning.
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.
Solid Liquidity Position to Aid Capital Distributions
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, 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.
GS’ Efforts to Expand Private Equity Credit Line
Goldman plans to ramp up its lending services to private equity and asset managers with an aim 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 sync with this, Goldman announced several initiatives in January 2025 to better serve its corporate and investor clients, and grow its business in private credit, private equity and other asset classes.
To extend and unify its whole suite of financing, origination, structuring and risk management solution activities within the Global Banking & Markets business, the company is forming the Capital Solutions Group. The business will also expand its Asset & Wealth Management unit alternatives investment team to guarantee the best understanding and application of investment sourcing and investing capacity.
On Feb. 11, at UBS financial services conference in Miami, Goldman’s CEO David Solomon stated that the GS is considering acquisitions in asset and wealth management but would be highly selective about any deal. "If we could find things that could accelerate our asset and wealth management journey, we would consider them," he stated.
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.
Is Now the Perfect Opportunity to Buy Goldman Stock?
GS’s efforts to refocus on the IB and trading businesses provide a solid base for growth in the upcoming period. 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.
Given these favorable factors, Goldman is expected to deliver strong results.
Sales Estimates
Earnings Estimates
Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
The GS stock also looks attractive from a valuation perspective. The stock is trading at a forward price/earnings (P/E) of 13.60X, a 5.8% discount compared with the industry average of 14.43X.
Price-to-Earnings F12M
Image Source: Zacks Investment Research
Goldman is also trading at a discount compared with its peer JPM's P/E multiple of 15.16X and MS's P/E multiple of 15.80X.
Given its strong long-term prospects and inexpensive valuation, investors can consider buying Goldman’s 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.