VALUATION HIGHLIGHTS
- Global Markets (FICC Trading, Equity Trading, Securities Financing) constitute 62% of the Trefis price estimate for Goldman Sachs's stock.
- Asset & Wealth Management constitutes 21% of the Trefis price estimate for Goldman Sachs's stock.
- Investment Banking (M&A Advisory, Equity Underwriting & Debt Origination) constitutes 17% of the Trefis price estimate for Goldman Sachs's stock.
WHAT HAS CHANGED?
Latest Earnings
Goldman posted a better-than-expected set of Q4 2024 results with earnings coming in at $4.11 billion, or $11.95 per share compared to $5.48 per share a year ago. Growth was driven by the bank's core investment banking operations as well as stronger trading profits amid rising markets.
POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE
Below are key drivers of Goldman Sachs' value that present opportunities for upside or downside to the current Trefis price estimate for the company's stock:
Bonds, Currencies & Commodities
- Trading Assets for Bonds, Currencies & Commodities : Goldman's FICC operations have historically been its biggest source of revenue. The global bank grew its debt-trading capital from $299 billion in 2020 to $414 billion in 2024. We currently forecast a 3% annual growth in FICC trading assets going forward. However, if Goldman's optimism about the FICC industry proves right, assets could grow by 5% annually to reach $580 billion by the end of our forecast period. This could raise our price estimate by 5%
- Yield on Trading Assets for Bonds, Currencies & Commodities: Goldman Sachs' FICC trading yields declined from 3.38% in 2020 to 2.31% in 2024. We expect yield figures to remain around 3% for the Trefis forecast period. However, if the metric grows to about 4% by the end of the review period, there could be a 10% increase to our price estimate.
For additional details, select a driver above or a division from the interactive Trefis split for Goldman Sachs at the top of the company page.
BUSINESS SUMMARY
Goldman Sachs is a leading global financial services firm with offices in over 30 countries. The company offers investment banking, securities, and investment management services to corporate, institutional, government, and high-net-worth individual clients.
SOURCES OF VALUE
Growing Asset Management Business
Goldman's assets under management (AUM) have seen significant growth over the last decade as the banking giant looks for ways to improve profitability even as its cornerstone trading business remains prone to high volatility. Goldman will likely have to focus more on its asset management business as new regulations begin to restrict proprietary trading and risk-taking, which is why we see the division as a significant value driver for the company. The bank is also pushing its online loans-and-deposits services to diversify its presence in the U.S. financial services space.
KEY TRENDS
Increasing Demand for Investment Banking Services in Emerging Markets
With the GDP of many emerging markets, such as India and Brazil, growing rapidly, there is an increasing demand for capital from companies in these markets to support expansion. Additionally, with the integration of these markets into the global economy, there is a shift in these countries from family-run businesses to global corporations. Accordingly, there is an increasing number of companies going public or raising debt capital, driving demand for equity underwriting and debt origination services. Consolidation across different sectors has also been driving demand for M&A advisory services.
Dominant position in investment banking
Goldman Sachs is a leader in the global investment banking space, with the bank ranking among the top three in the global M&A industry for nearly every single quarter over the last decade.
Asset management growth
Goldman Sachs has been actively expanding its asset and wealth management business, and secular trends like the shift toward private markets and alternatives have been a focus for the company. Goldman has moved away from mass-market retail banking, such as winding down its Marcus consumer banking unit while doubling down on high-net-worth clients and institutional investors.
