GS Investment Analysis Report & Stock Research, Goldman Sachs Group, Inc.

Goldman Sachs Group, Incorporated (GS)

GS Stock Report

2-Year Price History

View Larger GS Chart
NYSE:GS
$177.90
(3/19 4:00PM)
+0.3%
Open$178.19 Mkt Cap$93.6 Billion
High$178.35 52Wk High$193.60
Low$175.95 52Wk Low$103.94
Volume10.9 Million Avg Vol 10D10.7 Million

Ockham's Rating/Recommendation Summary

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GS Revenue

As a value investing shop, we are interested in seeing how GS's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 10 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 1.83x and the low end of the range at 0.86x.

With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for GS of 1.81x is significantly above its historical average. This places GS at the upper end of its historical range relative to sales per share and makes it difficult to suggest an attractive price outlook. At current sales per share levels, we would need to see a decline in the Price to Sales ratio of 34% merely to return GS to its historical average.

GS Cash Earnings

As the old saying goes, "Cash is King!" We look at reported Cash Earnings, but the main emphasis of our analysis involves stripping out non-cash events such as depreciation from our cash earnings analysis. This helps us view the cash flows more clearly. Nevertheless, an analysis of Cash Earnings (both reported and otherwise) is absolutely pivotal to assessing a company's value, and currently GS is significantly below its historical average multiple of cash earnings as calculated by Ockham. Similar to our analysis of sales per share, Ockham looks at the last 10 years of cash earnings levels for GS to identify where the current high and low price levels have been historically in relation to profit per share. Again, we utilize a weighted average methodology which relies more heavily on recent years of data. This weighted average framework provides us with an average high Price to Cash Earnings ratio per share of 19.95 and a 7.80 low over the same period.

Now that GS’s current price is $177.90 and its Price to Cash Earnings ratio is 7.68, we are very positive on its outlook from the cash earnings perspective. In fact, GS is now trading a full 45% below its average historical Price to Cash Earnings ratio at these profit per share levels. When our clients ask us why GS has great long term potential, the Cash Earnings levels to current stock is one of our primary reasons. But naturally, now we need for the overall market to recognize this disparity.

GS Dividends

When determining a company's future prospects for success, Ockham Research sees analysis of dividend payments as a key additional factor. Even though it isn't imperative for GS to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis.

The estimated annual dividend for GS is $1.40 producing a current dividend yield of 0.79%. Much like our evaluation of Sales and Cash Earnings per share, we review dividend yields from GS against the historic high and low levels over all available dividend history. Because dividends are a decision made exclusively by management, we view a healthy and rising dividend as a sign of confidence and strength. The highest dividend yield from GS over previous years was 2.95% while the lowest dividend yield was 0.40%. It is never a good sign for a company to pay significantly lower dividends, in this case 52.84% below the median yield. Although, dividends are a relatively small portion of our analysis framework, we still see this as a negative factor.

Peer Comparison

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Goldman Sachs Group, Inc. Industry Grouping

(3/19/2010)
Company Ticker Market Cap (Ml) Latest
Price
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
5-Yr.
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not including GS) 29.75 7.23 » 99.53 4.21 1.44 » 8.27 8.01% 19.65%
*10 year range does not include current year values
Goldman Sachs Group, Inc. GS $93.6 Billion $177.90 7.55 2.52 » 49.74 1.78 0.39 » 2.01 11.61% 21.12%
American Express Company AXP $48.1 Billion $40.33 22.53 5.42 » 50.90 1.80 0.43 » 2.94 -1.69% 28.94%
Franklin Resources, Inc. BEN $25.2 Billion $110.37 22.25 9.50 » 26.68 5.23 1.99 » 5.58 3.90% 19.22%
The Charles Schwab Corp. SCHW $22.2 Billion $18.58 28.15 8.37 » 310.93 4.95 1.96 » 8.71 -0.02% 30.12%
CME Group, Inc. CME $20.8 Billion $311.64 19.23 7.78 » 47.81 8.02 2.59 » 21.70 29.48% 13.54%
Capital One Financial Corp. COF $18.1 Billion $39.77 56.81 5.05 » 61.31 1.13 0.22 » 2.43 8.37% 6.44%
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The Trade

GS Is Among the Five Most Talked About Stocks in the News Today

If you own GS, then you need to get to a TV now. It has been mentioned in the news very frequently in the last hour.

It is also notable that we have recently upgraded this stock on Saturday, March 06, 2010 because GS is more attractive in many of the valuation metrics we evaluate. When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Goldman Sachs Group, Incorporated has actually sunk a bit in comparison to the others. The Ockham valuation currently has a Fairly Valued stance on GS because it trades within the price range that we would expect given current market conditions and fundamentals. Our sentiment indicator, provided through the Motley Fool CAPS survey, suggests that investors are neutral overall towards GS and think that it will generally perform in-line with the S&P 500.

“… At the very top of the status structure is GOLDMAN SACHS, traders of GOLDMAN SACHS, and hedge funds. When the people at the top set such a bad example, everything else in a ... …”

The Trade

The Amount of News Coverage on Goldman Sachs Group, Incorporated Places It in the Top Five Most Active Stocks

If you own GS, then you need to get to a TV now. It has been mentioned in the news very frequently in the last hour.

Crowd sentiment is neutral from the millions of opinions submitted through Motley Fool CAPS, which suggests most investors on their platform believe Goldman Sachs Group, Incorporated will perform just about the same as the index. The improving valuation of Goldman Sachs Group, Incorporated has prompted us to upgrade this stock as of Saturday, March 06, 2010. As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, GS has been less covered in the news compared to the rest of our universe of stocks. After factoring in the current fundamentals versus their historically normal ranges, we have established a Fairly Valued stance on GS.

“… Know that GOLDMAN SACHS and deutsche bank will come to you if something in you don't want to buy it. The single greatest trade in the history of the bond market, nobody believes ... …”

Mad Money

GS Is Among the Five Most Talked About Stocks in the News Today

The newswires are burning up right now on Goldman Sachs Group, Incorporated, so check our RazorWire or turn on your TV to see why it is so active in the news.

Premium Content - please sign up for Ockham PREMIUM to gain full access and to see what Mad Money said about GOLDMAN SACHS GROUP, INC.

Learn About RazorWire?
Fast Money

A Few Words from Fast Money on Goldman Sachs Group, Incorporated and Sentiment

Fast Money talked about the sentiment surrounding GS and the way they are perceived in the marketplace.

Goldman Sachs Group, Incorporated receives our Fairly Valued rating in our latest report because the current price does not seem out of line with the fundamentals. Please have a look at our report for our reasons to upgrade the stock to Fairly Valued on our report dated Saturday, March 06, 2010. We noticed recently that in comparison to all other stocks we analyze in the news; GS has received less coverage from the financial media in business television and blogs. The Motley Fool CAPS crowd believes this stock will perform generally in line with the benchmark, or in other words the crowd is neutral.

“… GOLDMAN SACHS upgrading the stock today. What do you see, though, in the charts? > > absolutely. So an excellent actually event today. …”

Fast Money

GS Is Among the Five Most Talked About Stocks in the News Today

The newswires are burning up right now on Goldman Sachs Group, Incorporated, so check our RazorWire or turn on your TV to see why it is so active in the news.

It is also notable that we have recently upgraded this stock on Saturday, March 06, 2010 because GS is more attractive in many of the valuation metrics we evaluate. The Ockham valuation currently has a Fairly Valued stance on GS because it trades within the price range that we would expect given current market conditions and fundamentals. When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Goldman Sachs Group, Incorporated has actually sunk a bit in comparison to the others. Our sentiment indicator, provided through the Motley Fool CAPS survey, suggests that investors are neutral overall towards GS and think that it will generally perform in-line with the S&P 500.

“… Just to joe's point, I love that GOLDMAN SACHS trade. I got out of it. I got my face ripped off on it on the first try. Maybe i'll try it next week. …”

Fast Money

The Amount of News Coverage on Goldman Sachs Group, Incorporated Places It in the Top Five Most Active Stocks

The newswires are burning up right now on Goldman Sachs Group, Incorporated, so check our RazorWire or turn on your TV to see why it is so active in the news.

We noticed recently that in comparison to all other stocks we analyze in the news; GS has received less coverage from the financial media in business television and blogs. Goldman Sachs Group, Incorporated receives our Fairly Valued rating in our latest report because the current price does not seem out of line with the fundamentals. Please have a look at our report for our reasons to upgrade the stock to Fairly Valued on our report dated Saturday, March 06, 2010. The Motley Fool CAPS crowd believes this stock will perform generally in line with the benchmark, or in other words the crowd is neutral.

“… You've seen a significant rally in GOLDMAN SACHS, morgan stanley. I actually went in and shorted GOLDMAN SACHS today. The reasoning is I believe this kind of empowers them. …”

Taking Stock

Taking Stock: An Extremely Hot News Day for Goldman Sachs Group, Incorporated Today

Be aware that something important has occurred for GS and investors interested in this stock should seek out information in any way possible.

It is also notable that we have recently upgraded this stock on Saturday, March 06, 2010 because GS is more attractive in many of the valuation metrics we evaluate. Our sentiment indicator, provided through the Motley Fool CAPS survey, suggests that investors are neutral overall towards GS and think that it will generally perform in-line with the S&P 500. The Ockham valuation currently has a Fairly Valued stance on GS because it trades within the price range that we would expect given current market conditions and fundamentals. When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Goldman Sachs Group, Incorporated has actually sunk a bit in comparison to the others.

“… Financials lower at -- after GOLDMAN SACHS saying it favors j. P. Morgan chase and bank of america versu mortgages stanley and citigroup. …”

Deal Breaker

RazorWire: GS and Regulators Talked About on Deal Breaker

Deal Breaker talked recently regarding regulatory issues and Goldman Sachs Group, Incorporated, while these two issues may not be related we though it worth noting.

When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Goldman Sachs Group, Incorporated has actually sunk a bit in comparison to the others. The Ockham valuation currently has a Fairly Valued stance on GS because it trades within the price range that we would expect given current market conditions and fundamentals. It is also notable that we have recently upgraded this stock on Saturday, March 06, 2010 because GS is more attractive in many of the valuation metrics we evaluate. Our sentiment indicator, provided through the Motley Fool CAPS survey, suggests that investors are neutral overall towards GS and think that it will generally perform in-line with the S&P 500.

“… To Probe Lehman Repo 105 And “Other” Accounting [ZH] $$$ AIG CDOs Sold to Federal Reserve Placed on Review for Downgrade by Moody’s [Bloomberg] $$$ GOLDMAN SACHS Sued for Not ... …”

WSJ Marketbeat

Merger Talk with GS on WSJ Marketbeat

News broke today regarding mergers and acquisitions and Goldman Sachs Group, Incorporated was discussed as well on WSJ Marketbeat. Other sources will be required to know exactly what the context was in the discussion.

The Ockham valuation currently has a Fairly Valued stance on GS because it trades within the price range that we would expect given current market conditions and fundamentals. Our sentiment indicator, provided through the Motley Fool CAPS survey, suggests that investors are neutral overall towards GS and think that it will generally perform in-line with the S&P 500. It is also notable that we have recently upgraded this stock on Saturday, March 06, 2010 because GS is more attractive in many of the valuation metrics we evaluate. When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Goldman Sachs Group, Incorporated has actually sunk a bit in comparison to the others.

“… ” GOLDMAN SACHS: ”Despite sales & marketing ballooning to an all-time high of $98 million (up 158% year-over-year), sell-through disappointed (down 29%  quarter-over-quarter and ... …”

Closing Bell

Goldman Sachs Group, Incorporated Crosses Extremely Active News Threshold for the Day, Now on Closing Bell

If you own GS, then you need to get to a TV now. It has been mentioned in the news very frequently in the last hour.

Premium Content - please sign up for Ockham PREMIUM to gain full access and to see what Closing Bell said about GOLDMAN SACHS GROUP, INC.

Learn About RazorWire?
View All Goldman Sachs Group, Inc. Stock News

Key Fundamentals

GS - Goldman Sachs Group, Incorporated Fundamentals
Price (3/19 4:00PM) $177.90
Volume (3/19 4:00PM) 10.9 Million
Last Close Price $177.45
10 Day Average Volume 10.7 Million
13 Week Price Range $147.81 - $178.75
52 Week Price Range $103.94 - $193.60
LTM Revenue $51.7 Billion
 
Shares Outstanding (12/2009) 526.3 Million
Market Capitalization $93.6 Billion
Shares Held By Institutions 396.1 Million
Institutional Holders 1,343
% Shares Held By Institutions 77.50%
Earnings Per Share (EPS) $22.13
P/E Ratio 8.00
Book Value Per Share $121.15
 
Gross Margin n/a%
Annual Dividend 1.40
Dividend Yield 0.80%
Beta 1.43
Fiscal Year Ends December

About Goldman Sachs Group, Inc.

Goldman Sachs Group, Incorporated is considered to operate in the Financial sector. They specifically operate in the Diversified Investments business segment contained within the Financial Services industry.

A bank holding company, which operates as a global investment banking, securities and investment management firm. It provides a range of services to corporations, financial institutions, governments and high-net-worth individuals.