Since May 2021, the S&P 500 has delivered a total return of 78.6%. But one standout stock has more than doubled the market - over the past five years, Goldman Sachs has surged 162% to $968.96 per share. Its momentum hasn’t stopped as it’s also gained 24.9% in the last six months thanks to its solid quarterly results, beating the S&P by 13.4%.
Is there a buying opportunity in Goldman Sachs, or does it present a risk to your portfolio? See what our analysts have to say in our full research report, it’s free.
Why Is Goldman Sachs Not Exciting?
Despite the momentum, we're swiping left on Goldman Sachs for now. Here are three reasons why GS doesn't excite us and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years.
Over the last five years, Goldman Sachs grew its revenue at a sluggish 2.5% compounded annual growth rate. This fell short of our benchmarks.
2. EPS Barely Growing
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Goldman Sachs’s weak 3.1% annual EPS growth over the last five years aligns with its revenue performance. On the bright side, this tells us its incremental sales were profitable.
3. Substandard TBVPS Growth Indicates Limited Asset Expansion
Tangible book value per share (TBVPS) is a crucial metric that measures the actual value of shareholders’ equity, stripping out goodwill and other intangible assets that may not be recoverable in a worst-case scenario.
Goldman Sachs’s TBVPS increased by a meager 7.1% annually over the last five years, and its recent performance paints an even worse picture as growth has decelerated a bit to a tepid 5.9% over the past two years (from $295.96 to $331.70 per share).
Final Judgment
Goldman Sachs isn’t a terrible business, but it doesn’t pass our bar. With its shares beating the market recently, the stock trades at 16× forward P/E (or $968.96 per share). Beauty is in the eye of the beholder, but we don’t really see a big opportunity at the moment. We're pretty confident there are more exciting stocks to buy at the moment. Let us point you toward a top digital advertising platform riding the creator economy.
Stocks We Would Buy Instead of Goldman Sachs
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