[Updated 12/05/2021] goldman sachs update
goldman sachs stock (NYSE: GS) has gained a 47% YTD, and at its current price of $388 per share, it has the potential to rise 15% against its fair value of $447 — estimates Trefis. Goldman Sachs Valuation, The bank topped consensus estimates in recently released third-quarter results, with total revenue rising 26% year over year to $13.6 billion. This can be attributed to 88% growth in investment banking revenue, 23% growth in global markets and 35% growth in consumer and wealth management segments. This was partially offset by an 18% year-over-year decrease in the asset management business due to lower equity investment revenue. In addition, the above increase translated into a 63% year-on-year increase in adjusted net income to $5.3 billion.
The company’s top-line grew 22% annually to $44.6 billion in 2020. This was driven by 24% growth in investment banking revenue due to higher underwriting deal volumes, followed by a 43% jump in global markets (sales and trading) and 10% growth in the consumer and wealth management segment. Consumers and wealth management benefited from the increase in assets under supervision (AUS) – AUS increased 10% annually to $615 billion. In addition, the bank has registered solid growth in the first nine months of 2021. Cumulative nine-month revenue grew 42% year over year to $46.7 billion. This was due to 63% growth in investment banking, 152% growth in asset management and 27% growth in consumer and wealth management segment. The global market unit, which contributes the largest revenue share, grew just 7% year-on-year due to some decline in the FICC (Fixed Income, Currency and Commodity) trading business. Notably, the asset management segment benefited from over 2x growth in equity investment revenue. Overall, we expect fourth quarter results to follow a similar trend to third quarter, enabling us to Goldman Sachs Revenue To touch $59.2 billion in FY2021. Additionally, the company’s net income margin is likely to see a significant improvement over the year, bringing adjusted net income to $20.4 billion. In addition, the firm has increased its shareholder payouts in 2021, both common stock dividends and share repurchase plans. This would likely enable the firm to report EPS of $59.37 in the year, combined with a P/E multiplier of close to 8x, valuing $447.
[Updated 08/25/2021] Goldman Sachs stock is very valuable
goldman sachs stock (NYSE:GS) has gained 55% YTD, and at its current price of $409 per share, it is trading slightly above its fair value of $406 — according to estimates from Trefis. Goldman Sachs Valuation, The firm recently released its second quarter FY2021 results, surpassing consensus estimates for revenue and earnings. It reported total revenue of $15.4 billion — a 16% increase from the year-ago period. This can be attributed to 36% growth in investment banking revenue and 1444% jump in asset management segment. The investment banking unit posted revenue of $3.6 billion, its second-highest number to date, primarily driven by growth in the mergers and acquisitions and equity underwriting sub-segments. In addition, the asset management business benefited from a significant increase in revenue from equity investments – from $924 million to $3.7 billion. Notably, global markets (sales and trading) revenue declined 32% year-on-year, driven by a 45% decline in the FICC (fixed income, currency and commodity) sub-segment. Overall, the bank posted strong profitability numbers in the quarter – adjusted net income grew 138% year over year to $5.3 billion, partly due to higher revenue and partly due to a favorable reduction in provisions for credit losses and as a % of revenue. on account of lower operating expenses.
Goldman Sachs’ revenue of $44.6 billion in 2020 was 22% higher than the 2019 figure. This was driven by growth in investment banking and sales and trading businesses. The same trend continued in the first quarter of 2021, with the investment banking and sales and trading businesses reporting record growth. In addition, asset management revenue jumped –A significant increase in the equity investment sub-category from $96 million in the year-ago period to $4.61 billion in the quarter. While the investment banking and asset management units maintained their growth momentum in the second quarter, the sales and trading business posted negative growth due to a relative decline in trading volume on a year-on-year basis. Going forward, we expect business volumes and higher investment banking transaction volumes to normalize in the subsequent quarters, with the economy improving. in totality, Goldman Sachs Revenue It is likely to be around $52.8 billion for fiscal 2021. Additionally, the company’s net income margin is expected to improve over the year, bringing adjusted net income to $16.2 billion — nearly 90%. In addition, the bank has increased its common stock dividend by 60% to $2.00 (effective from the third quarter), in addition to resuming its share repurchase program in the first quarter of 2021. This coupled with higher revenue will enable the firm to report. An EPS of $47.15 over the year, coupled with a P/E multiplier of just below 9x, would lead to a valuation of $406.
[Updated 05/17/2021] Up 40% YTD, Goldman Sachs stock is trading near its fair value
goldman sachs stock (NYSE:GS), the market leader in the investment banking sector, gained nearly 40% — up from about $264 in early 2021 to about $369 currently, outperforming the S&P 500, which grew 11% over the same period. This increase was in line with other US bank stocks, as evidenced by the Dow Jones US Banks Index (up 36% YTD).
There were two obvious reasons for this: First, the approval of a stimulus package of $1.9 trillion. Second, the fast-moving Kovid-19 vaccination campaign in America – 47% of the US population Has already received at least one dose. Both the above factors strengthen the prospects of a strong economic recovery, thereby boosting investor sentiment.
But is that all in the story?
Not quite, despite recent gains, estimates Trefis Goldman Sachs Valuation Slightly above current market price — about $385 per share — based on a prime opportunity and a risk factor.
The opportunities we see have a better trajectory for Goldman Sachs Revenue in subsequent quarters. Goldman Sachs saw significant growth in the top-line for the full year 2020. It reported $44.6 billion in revenue — up 22%, driven primarily by 24% growth in investment banking and a 43% jump in global markets (sales and trading). ) businesses. While growth in investment banking was due to higher underwriting volumes, reflecting an increase in initial public offering and loan origination activity, sales and trading benefited from higher trading volumes due to the impact of the COVID-19 crisis. Notably, both of the above businesses cumulatively generate about 61% of total revenue, which increased to 69% in 2020. In addition, the bank’s assets under supervision (AUS) increased 18% year-on-year to $1.5 trillion by the end of the year.
The same trend continued in the first quarter of fiscal 2021, with the bank outperforming consensus estimates by a wide margin — revenue in the quarter doubled year-on-year to $17.7 billion. While all its sectors registered growth, the growth can be mainly attributed to 73% growth in investment banking and 47% growth in global markets (highest quarterly net revenue since 2010). Notably, the bank’s asset management revenue — increased to $4.61 billion from $96 million in the year-ago period, reflecting record revenue in the equity investment sub-segment. In addition, GS has seen continued growth in assets under supervision (AUS) in recent quarters, touching $1.56 trillion in Q1 — 2% sequentially, benefiting its asset management segment. That said, high trading volumes and unusual spurts in underwriting deal volumes are expected to normalize with the improvement in economic conditions. But, until then, sales and business and investment banking are likely to dominate its quarterly results. In addition, Goldman’s core banking operations are significantly smaller than those of its counterparts. Therefore, the low interest rate environment is not likely to have a significant impact on its top-line. Overall, we expect GS revenue for fiscal 2021 to be approximately $49.8 billion.
Revenue growth coupled with lower operating expenses is likely to improve the bank’s profitability figures in fiscal 2021 — an adjusted net income figure of $14.8 billion (up 66% yoy). This is expected to increase EPS for the year from $24.74 to $44.02, which combined with a P/E multiplier of below 9x, would result in a valuation of approximately $385.
Finally, how much should the market pay per dollar of Goldman Sachs earnings? Well, to earn about $44.02 per year from a bank, you need to deposit about $4402 into a savings account today, so almost 100 times the desired income. At Goldman Sachs’ current share price of around $369, we’re talking about a P/E multiplier of above 8x. And we think a figure closer to 9x would be appropriate.
That said, banking is a risky business right now. Growth in lending looks less promising, and near-term prospects are less than rosy. What’s behind that?
Goldman Sachs increased its provisions for loan losses in FY20 to offset the higher risk of loan default. The bank has a portfolio of about $105 billion in total loans (as of March 2021 data) and a sudden rise in COVID-19 cases or a downturn in the economic…