Despite its upcoming earnings decline, Goldman Sachs (GS) remains reasonably valued as it prepares to surpass its August 2021 all-time-high. From 2019 to 2021, Goldman’s EPS surged, aided by favorable financial conditions such as low interest rates and the SPAC IPO boom. However, the company now anticipates a decline in EPS for the next two years.
Goldman’s current valuation, at 11x PE and 1.3x price-to-book value, is reasonable considering its expected EPS growth of 65% in 2024. The company’s recent performance, including its involvement in the Reddit IPO, and the surge in corporate bond issuance, suggest potential for further growth.
Notably, the financial sector has been performing well recently, with big bank stocks like JPMorgan, Citigroup, and Morgan Stanley showing resilience amid market sell-offs. This may indicate that the Fed is closer to reducing interest rates than anticipated, which would benefit the financial sector.
Goldman Sachs’s monthly chart indicates that the stock is not yet overbought, suggesting room for further appreciation. While past performance is not indicative of future results, Goldman remains a solid investment with strong fundamentals and a reasonable valuation.
