The Goldman Sachs Group, Inc. (GS): what the price requires

At today's price, The Goldman Sachs Group, Inc. (GS) is priced for 23.4% return on equity. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-13 · Source: https://boothcheck.com/report/GS

Headline

FieldValue
TickerGS
CompanyThe Goldman Sachs Group, Inc.
Current price$1047.27/sh
CompositionGlobal Banking & Markets 71% / Asset & Wealth Management 29% / Platform Solutions 0%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basisfinancials
Return on equity needed23.4%
Return on equity now14.8%
ROE gap+8.6pp
Price-to-book2.83x

Solve inputs: computed at a 10.8% cost of equity with 4% terminal growth over a 5-year stage, on common book equity (FY2026); each 1pp of cost of equity moves the implied ROE ~2.8pp.

Reconcile: at the x-ray's 9.3% required return this reads ~18.9%; the models below use their own rates.

How unusual the bet is: elevated

ReferenceValue
vs own history+2.51σ
cohort percentile (of 72 peers)35
sustained it ~10 years at this level49%
implied end-window share0%

Valuation X-Ray

The price is supported by earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.41x4expensive
Earnings1.18x2expensive
Relative1.00x4justifies
Growth1.15x1expensive

Families that justify the price: Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.1%); the inversion above states its own rate.

Per-Model Detail (n=11)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$0.00—noNegative/zero FCF — equity value floored at $0
DCF Exit MultipleGrowth$0.00—noNegative/zero FCF or EBITDA — equity value floored at $0
Relative ValuationRelative$783.961.34xyesP/E 12x (sector median), scenarios: 9.9x / 12.0x / 14.1x (bear / base = sector held flat / bull), EV/EBITDA N/Ax
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$634.191.65xyesBV/sh $398.64, ROE (TTM) 14.7%, ke 9.3%
Two-Stage Excess ReturnAsset$790.751.32xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$912.341.15xyesRev $60.4B, growth 11% (input: historical growth; tapered), Terminal P/S: 4.4x / 5.3x / 6.3x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$1564.200.67xyesEPS $54.75, growth 29% (input: historical EPS growth), PEG=0.62 (Undervalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings——no—
Residual IncomeAsset$812.911.29xyesBV $398.64 + 5yr PV of (ROE (TTM) 14.7% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$700.771.49xyes√(22.5 × EPS $54.75 × BVPS $398.64) — Graham's conservative floor
EV/EBITDA RelativeRelative——no—
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$1766.600.59xyesEPS $54.75 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative$588.781.78xyesRevenue $60.45B × sector P/S 3.0x
PEG Fair ValueRelative$2053.130.51xyesEPS $54.75 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$591.891.77xyesEPS $54.75 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Share count CAGR (buyback)-3.5%

Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).

Bullet Takeaways

Bull Case

The most surprising thing in Goldman's data is that a firm posting record revenues is trading above where the valuation methods and the analyst consensus say it should be, and the bull case is that the methods are anchored to a normalized past that the franchise has outgrown. Goldman is no longer the consumer-lending experiment of a few years ago; it has refocused on its two crown jewels, Global Banking & Markets and Asset & Wealth Management, and the results show the payoff. First-quarter earnings of $17.55 per share beat the $16.49 estimate, profit rose 19% to $5.63 billion, and Global Banking & Markets delivered record quarterly revenue of $12.7 billion. The FY2025 10-K shows the firm shifting attributed equity toward Global Banking & Markets and away from the de-emphasized Platform Solutions (FY2025 10-K, accession 0000886982-26-000091), capital allocation that concentrates the business on its highest-returning franchises.

The breadth of the franchise is what justifies a premium to a simple book-value multiple. Investment-banking fees climbed 48% to $2.84 billion on a surge in completed-merger advisory, the area where Goldman's brand and relationships are strongest, and equities trading set a record at $5.33 billion, up 27%. Even with a weak fixed-income quarter, the overall markets and banking machine reached a record, which speaks to a diversified set of revenue engines that can offset one another. When advisory and equities are firing, Goldman captures the highest-margin, most relationship-driven fees in finance, and those are precisely the revenues that a tangible-book-value method underweights.

The capital return underlines management's confidence. In June the firm raised its dividend 15% and authorized a $20 billion stock buyback, a substantial return of capital that shrinks the share count and lifts per-share book value and earnings. For a bank-like institution, buying back stock above tangible book is only accretive if returns on equity stay high, and Goldman is signaling it expects them to. The relative valuation method lands near $915 and the discounted-future-market-cap method near $956, both close to the price, and the Peter Lynch and Ben Graham growth formulas reach far higher, toward $1,500 and beyond. For a buyer who believes the refocused franchise can sustain elevated returns, the premium to the conservative methods is the price of owning the premier advisory and trading franchise as it returns $20 billion to shareholders.

Bear Case

The bear case is a sector-cycle observation, and it is the one the record headline conceals: Goldman's first-quarter results were powered by trading and deal activity that are cyclically elevated, not by a permanently higher baseline. Equities trading set a record at $5.33 billion precisely because markets were volatile, and CEO David Solomon himself referenced rising volatility "amid the broader uncertainty" of the period. Trading revenue is feast-or-famine: it spikes when markets are chaotic and collapses when they are calm. Investment-banking fees jumped 48% on a surge in completed mergers, but M&A is one of the most cyclical revenue lines in finance, dependent on CEO confidence, financing markets, and regulatory posture, all of which can reverse quickly. The price is capitalizing a peak, and a peak in a cyclical business is the wrong base to value.

The lopsidedness within the quarter shows how quickly the mix can turn. While equities set a record, fixed-income revenue fell 10% to $4.01 billion, an unusually large miss of roughly $910 million versus estimates. That single-quarter swing in one desk illustrates the inherent volatility of the trading franchise: the same forces that produced a record in equities produced a sharp miss in FICC, and the next quarter could invert that. A business whose largest profit engine can swing hundreds of millions of dollars quarter to quarter does not deserve a premium multiple on a peak-earnings quarter.

The valuation already reflects optimism the cycle may not sustain. The price near $1,097 sits above the relative method at $915, the residual-income method at $813, and the simple excess-return method at $634, and above the analyst consensus near $880, with JP Morgan setting a $900 target that implies meaningful downside. The framework characterizes the embedded assumption as elevated. The $20 billion buyback is shareholder-friendly, but buying back stock at a premium to tangible book near a cyclical peak is risky capital allocation if returns normalize, because it spends capital at high prices that could be needed if a downturn pressures the trading book. The bull case rests on the refocused franchise sustaining peak-like returns; the bear case is that trading and deal-making revert to mid-cycle, the record quarter proves to be the high-water mark, and a stock priced above the methods and above the Street drifts back toward them.

Valuation

Goldman is valued on a financials basis, anchored to tangible book value and return on equity, and the methods broadly say the price is full. The relative valuation method lands near $915 and the discounted-future-market-cap method near $956, both modestly below the $1,097 price. The asset-based methods land lower: the two-stage excess-return method near $791, residual income near $813, the simple excess-return method near $634, and the Graham number near $701. A few growth-oriented formulas, Peter Lynch near $1,564 and the Ben Graham formula near $1,767, print far higher, but those extrapolate growth that is unusual for a mature, cyclical bank. The central blended read is about $853, below the current price.

The inverted view is consistent with an elevated reading. The price is characterized as supported by earnings-power, relative-multiple, and growth-DCF value, with the composite flagged as elevated, above what the fundamentals comfortably support. For a financial, the key question is whether the current return on equity, lifted by record trading and advisory, is sustainable, and the price assumes it largely is.

The honest synthesis is that the stock is pricing Goldman as if its record quarter is the new normal. The refocused franchise, the record Global Banking & Markets revenue, and the 48% jump in advisory fees are genuine strengths, and the $20 billion buyback plus the 15% dividend increase are real capital returns. But the methods that anchor to tangible book and normalized returns sit below the price, the analyst consensus near $880 sits below the price, and trading and deal-making are inherently cyclical. The value depends on whether the elevated returns persist or revert.

Catalysts

The dominant catalyst is the trading and deal-making cycle, where equities trading set a first-quarter record at $5.33 billion and investment-banking fees jumped 48% to $2.84 billion; each subsequent quarter tests whether that activity persists or reverts, and the fixed-income miss to $4.01 billion shows how fast the mix can swing. Capital return is a concrete, recent catalyst, with the firm raising its dividend 15% and authorizing a $20 billion buyback in June 2026, which reduces the share count and supports per-share metrics. Market volatility is the key external driver, since it powers trading revenue, and CEO David Solomon flagged elevated uncertainty as a tailwind for the desk. The merger-and-acquisition environment is a forward catalyst for the advisory franchise, dependent on CEO confidence, financing conditions, and regulatory posture. Annual stress-test results and capital requirements are standing catalysts for a bank-like institution, governing how much it can return. Sentiment is cautious despite the strong results, with a Hold consensus and a consensus target near $880 below the current price, and JP Morgan setting a $900 target on June 12, 2026; the stock trading above the Street means the burden is on continued record results to justify the price rather than on a re-rating higher.

Sources: CNBC Q1, Yahoo Finance trading, MarketBeat forecast, Benzinga ratings

Peer Cohorts (Per Segment, With Filing Citations)

Global Banking & Markets (reported)

Asset & Wealth Management (reported)

Platform Solutions (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive GS report on boothcheck