Goldman Sachs Group (GS) has been reshuffled across several Russell indices, moving out of multiple growth benchmarks and into value and defensive categories. This change could matter for index-linked and style-focused investors.
See our latest analysis for Goldman Sachs Group.
At a share price of $1,021.0, Goldman Sachs Group has seen short term momentum cool, with the 7 day and 30 day share price returns both down more than 4%, even as the 90 day share price return of 18.30% and 1 year total shareholder return of 43.92% point to stronger longer term momentum.
If the shift toward value and defensive indices has you rethinking your sector mix, it can help to widen your search beyond big financials and consider 20 top founder-led companies
With Goldman Sachs Group now trading above its average analyst price target and screening with a low value score of 3, investors have to ask whether there is still mispricing or whether the market is already accounting for potential future growth.
Most Popular Narrative: 2.8% Undervalued
Goldman Sachs Group's most followed narrative pegs fair value at $1,050, slightly above the last close of $1,021, framing the recent index shift against a relatively tight valuation gap.
Analysts broadly agree that record assets under supervision and consecutive quarters of net inflows solidify asset and wealth management as a durable revenue driver. However, this likely understates the growth potential from alternative investments and infrastructure. As flagship fund launches and increased private asset allocation, especially from both global institutions and new retail access channels, accelerate, recurring fee-based revenue growth could materially outpace current consensus, driving outsized top-line and earnings growth.
Curious what revenue mix and margin profile would need to line up for that fair value to make sense? The narrative leans heavily on fee based compounding, a richer earnings base and a lower discount rate to support that price.
Result: Fair Value of $1,050 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, this bullish Goldman Sachs Group narrative still faces real tests, especially if trading and investment banking revenue remain volatile or regulatory demands increase costs and capital needs.
Find out about the key risks to this Goldman Sachs Group narrative.
Another View: What a Cash Flow Model Says About Goldman Sachs Group
While the popular Goldman Sachs Group narrative leans on earnings and a $1,050 fair value, the Simply Wall St DCF model tells a different story. On that approach, GS at $1,021 sits above an estimated future cash flow value of $926.72, which implies the stock screens as overvalued on cash flows today.
For investors, that gap raises a simple question: Are earnings based narratives or cash flow based models closer to how you think the market will eventually price Goldman Sachs Group?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Goldman Sachs Group for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 43 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
If this mix of optimism and caution around Goldman Sachs Group leaves you undecided, take a closer look at the underlying data, move quickly to form your own view, and then weigh up the 3 key rewards and 2 important warning signs
Looking for more investment ideas beyond Goldman Sachs Group?
If Goldman Sachs Group has sharpened your thinking, do not stop here. Broaden your watchlist with other stocks that fit clear, data backed criteria using screeners.
- Target resilient cash generators that still look overlooked by running the screener containing 18 high quality undiscovered gems.
- Prioritize staying power in tougher markets by reviewing the solid balance sheet and fundamentals stocks screener (46 results).
- Dial down portfolio risk while keeping equity exposure active through the 75 resilient stocks with low risk scores.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com