Goldman Sachs (GS)

Global investment bank Goldman Sachs (NYSE:GS) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 19.6% year on year to $15.18 billion. Its GAAP profit of $12.25 per share was 10.5% above analysts’ consensus estimates.

Company Overview

Founded in 1869 as a small commercial paper business in New York City, Goldman Sachs (NYSE:GS) is a global financial institution that provides investment banking, securities, asset management, and consumer banking services to corporations, governments, and individuals.

Investment banks and brokerages facilitate capital raises, mergers and acquisitions, and securities trading. The sector benefits from corporate activity during economic expansion, increased retail trading participation, and advisory opportunities in emerging sectors. Headwinds include economic cycle vulnerability affecting deal flow, compressed trading commissions due to electronic platforms, and regulatory capital requirements constraining certain higher-risk activities.

Goldman Sachs competes with other global investment banks including JPMorgan Chase (NYSE:JPM), Morgan Stanley (NYSE:MS), Bank of America (NYSE:BAC), and Citigroup (NYSE:C). In wealth and asset management, it faces competition from BlackRock (NYSE:BLK), Blackstone (NYSE:BX), and UBS Group (NYSE:UBS).

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Regrettably, Goldman Sachs’s revenue grew at a mediocre 6.5% compounded annual growth rate over the last five years. This wasn’t a great result compared to the rest of the financials sector, but there are still things to like about Goldman Sachs.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Goldman Sachs’s annualized revenue growth of 13.5% over the last two years is above its five-year trend, suggesting its demand recently accelerated. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

Goldman Sachs also breaks out the revenue for its most important segments, Banking & Markets and Asset & Wealth Management, which are 66.6% and 29% of total revenue. Banking & Markets revenue grew by 6.4% and 14.3% annually over the past five and two years, respectively, both in line with its total revenue. At the same time, Asset & Wealth Management revenue increased by 6.7% and 12.7% per year over the past five and two years, respectively. These results aligned with its total revenue performance.

This quarter, Goldman Sachs reported year-on-year revenue growth of 19.6%, and its $15.18 billion of revenue exceeded Wall Street’s estimates by 6.8%.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Goldman Sachs’s EPS grew at a spectacular 23.2% compounded annual growth rate over the last five years, higher than its 6.5% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its pre-tax profit margin didn’t improve.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Goldman Sachs, its two-year annual EPS growth of 54.4% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q3, Goldman Sachs reported EPS of $12.25, up from $8.40 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Goldman Sachs’s full-year EPS of $49.23 to grow 8%.

Financial institutions manage complex balance sheets spanning various financial activities. Valuations reflect this complexity, emphasizing balance sheet quality and long-term book value compounding across multiple revenue streams.

This explains why tangible book value per share (TBVPS) is a premier metric for the sector. TBVPS provides concrete per-share net worth that investors can trust when evaluating companies with complex, multi-faceted business models. On the other hand, EPS is often distorted by the diverse nature of operations, mergers, and various accounting treatments across different business units. Book value provides clearer performance insights.

Goldman Sachs’s TBVPS grew at a solid 10.7% annual clip over the last five years. The last two years show a similar trajectory as TBVPS grew by 11% annually from $287.32 to $353.79 per share.

Return on equity (ROE) measures how effectively banks generate profit from each dollar of shareholder equity - a critical funding source. High-ROE institutions typically compound shareholder wealth faster over time through retained earnings, share repurchases, and dividend payments.

Over the last five years, Goldman Sachs has averaged an ROE of 13%, respectable for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This shows Goldman Sachs has a narrow competitive moat.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Goldman Sachs has averaged a Tier 1 capital ratio of 1,310%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

We were impressed by how significantly Goldman Sachs blew past analysts’ Banking & Markets segment expectations this quarter. We were also excited its Asset & Wealth Management segment outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a good print with some key areas of upside. The market seemed to be hoping for more, and the stock traded down 3.2% to $762.49 immediately following the results.

Updated: December 4, 2025 at 11:17 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Goldman Sachs, you should also grasp the company’s longer-term business quality and valuation.

There’s plenty to admire about Goldman Sachs. Although its revenue growth was mediocre over the last five years, its worsening efficiency ratio shows the business has become less productive. On top of that, its solid EPS growth over the last five years shows its profits are trickling down to shareholders.

Goldman Sachs’s P/E ratio based on the next 12 months is 15.6x. Looking at the financials landscape right now, Goldman Sachs trades at a pretty interesting price. If you believe in the company and its growth potential, now is an opportune time to buy shares.

Wall Street analysts have a consensus one-year price target of $802.53 on the company (compared to the current share price of $838.19).