The Goldman Sachs Group, Inc.

GS Stock Analysis

Technical Analysis GS shows strong momentum over the past three months, significantly outperforming the market by over 13 percentage points despite a recent 6% pullback. While its high beta of 1.31 indicates volatility, the stock remains in the upper portion of its 52-week range without appearing overbought. The drawdown of 31% highlights its cyclical nature, offering both entry opportunities and downside risk.

Fundamentals Revenue declined sequentially in Q4, but profitability improved with net income margin rising to 15.3%, showcasing operational resilience. Goldman Sachs maintains a solid balance sheet with a low 34.2% debt ratio, though its low interest coverage ratio is a concern in the current high-rate environment. Operational metrics like modest ROE and low asset turnover reflect the capital-intensive banking model, not inefficiency.

Valuation & Risk The stock trades at a reasonable valuation with a forward PE of 14.88, suggesting it is fairly priced relative to earnings growth expectations. Key risks include market-sensitive volatility and dependence on capital markets activity, though the lack of high short interest indicates broader market confidence. Interest rate fluctuations and trading volumes remain critical variables for performance.

Recommendation Based on the analysis, GS is a BUY for investors comfortable with market-linked volatility. The company’s strong brand, improving profitability, and reasonable valuation provide a solid foundation for medium- to long-term growth. While interest coverage and economic cycles pose risks, GS’s market leadership and resilience justify positioning for a rebound. *(Not investment advice; for reference only.)*

RockFlow Model Forecast: Three Scenarios for 2026

Based on the analysis, the 12-month outlook for Goldman Sachs (GS) is cautiously optimistic. Key catalysts are expected to be a potential rebound in capital markets activity, including M&A and IPOs, which would leverage the firm's strengths, alongside demonstrated operational resilience leading to improved profitability. The primary risks remain its high sensitivity to market volatility (beta of 1.31) and the trajectory of interest rates, which could pressure performance if activity remains subdued. Given the lack of a specific analyst target, a reasonable target price range would be aligned with market recovery, potentially offering upside towards the $1,000-$1,100 zone as cyclical conditions improve, contingent on stable economic indicators.

Wall Street Consensus

Most Wall Street analysts are optimistic about The Goldman Sachs Group, Inc.'s 12-month outlook, with consensus target around $916.65, indicating expected upside potential.

Overall, GS has investment potential but also faces challenges. Here are key factors to weigh before investing.

GS demonstrates strong long-term momentum despite recent volatility, with the stock nearly doubling from its 52-week low.

The stock has retreated approximately 6% over the past month but maintains impressive 13% gains over three months, significantly outperforming the market by over 13 percentage points during that period. This short-term weakness follows a substantial rally, with the stock's high beta of 1.31 indicating greater volatility than the broader market.

Currently trading at approximately 81% of its 52-week high, GS sits comfortably in the upper portion of its yearly range but remains below overbought territory. The substantial 31% maximum drawdown over the past year highlights the stock's volatility profile, suggesting potential for both upside and downside movements from current levels.

Revenue & Profitability GS posted $30.1 billion in Q4 revenue, a sequential decline from Q3's $32.2 billion. However, the firm demonstrated improved profitability, with its net income margin expanding to 15.3% in Q4 from 12.7% in the prior quarter, primarily due to a significant benefit from other expenses. This indicates effective bottom-line resilience despite a quarterly revenue contraction.

Financial Health The company maintains a conservative debt ratio of 34.2%, reflecting a strong balance sheet. However, the interest coverage ratio is notably low at 0.22, suggesting that operating earnings are currently insufficient to cover interest obligations, which is a critical area for monitoring given the high-interest expense environment. The current ratio of 1.21 indicates adequate short-term liquidity.

Operational Efficiency GS's operational efficiency metrics are mixed, with a low asset turnover of 0.017, which is typical for an asset-intensive investment bank. The return on equity (ROE) stands at 3.7%, which is relatively modest, indicating room for improvement in generating returns from shareholder equity. The high days sales outstanding (555.7 days) reflects the nature of its long-duration trading and investment activities.

Valuation Level: With a TTM PE of 16.29 and a forward PE of 14.88, Goldman Sachs trades at a moderate valuation level. The PEG ratio is slightly above 1.0, indicating the stock's price is roughly in line with its expected earnings growth, neither significantly overvalued nor undervalued based on this primary metric.

Peer Comparison: A direct peer comparison is not possible due to the unavailability of industry average data for the financial sector. However, the elevated EV/EBITDA ratio suggests the market is assigning a premium valuation relative to its operating earnings, though this metric can be less informative for capital-intensive financial firms.

Volatility Risk: GS exhibits significant sensitivity to market movements, given its beta of 1.311, indicating it tends to be more volatile than the broader market. This is further evidenced by a substantial one-year maximum drawdown of -31.24%, highlighting the potential for considerable peak-to-trough losses during periods of market stress.

Other Risks: While the absence of notable short interest suggests a lack of strong negative sentiment from short-term traders, the primary risks are likely concentrated in its operational exposure and liquidity. As a global investment bank, its performance is inherently tied to capital markets activity, transaction volumes, and interest rate fluctuations, which can impact earnings stability.