For most investors, how much a stock’s price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you’d invested in Goldman Sachs (GS) ten years ago? It may not have been easy to hold on to GS for all that time, but if you did, how much would your investment be worth today?
Goldman Sachs’ Business In-Depth
With that in mind, let’s take a look at Goldman Sachs’ main business drivers.
Founded in 1869, The Goldman Sachs Group, Inc. is a leading global financial holding company providing IB, securities, investment management and consumer banking services to a diversified client base. The company is headquartered in New York, with offices in major financial centers globally.
Goldman provides its services through the following broad segments:
The Global Banking and Markets segment (constitutes 64.9% of net revenues in 2023) generates revenues from IB fees, including advisory, and equity and debt underwriting fees, Fixed Income, Currency and Commodities (FICC) intermediation and financing activities and Equities intermediation and financing activities. The segment also includes relationship lending and acquisition financing (and related hedges) and investing activities related to its Global Banking & Markets activities.
The Asset and Wealth Management segment (30%) generates revenues from management and other fees, incentive fees, equity investments and debt investments, as well as private banking and lending.
The Platform Solutions segment (5.1%) generates revenues from consumer platforms, and transaction banking and other platform businesses.
In 2023, Goldman completed the divestiture of its Personal Financial Management unit to Creative Planning, resulting in a gain of $349 million.
In 2022, the company acquired robo-advisor, NextCapital and Dutch asset manager, NN Investment Partners from NN Group N.V. The company also closed the acquisition of GreenSky in an all-stock transaction. In 2020 and 2019, Goldman completed its purchase of Folio Financial and United Capital, respectively.
Bottom Line
Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For Goldman Sachs, if you bought shares a decade ago, you’re likely feeling really good about your investment today.
According to our calculations, a $1000 investment made in May 2014 would be worth $2,989.96, or a gain of 199%, as of May 20, 2024, and this return excludes dividends but includes price increases.
Compare this to the S&P 500’s rally of 182.41% and gold’s return of 79.53% over the same time frame.
Analysts are forecasting more upside for GS too.
Shares of Goldman have outperformed the industry in the past six months. Its better-than-expected first-quarter 2024 results benefited from the strength in the consumer banking and investment banking (IB) businesses, along with improved fee income. The company intends to refocus on the core strengths of IB and trading businesses. Improvement in global deal-making and underwriting activities and Goldman’s leading position are likely to drive IB fees. We expect IB revenues to grow 17.8% year over year in 2024. However, subdued capital market activity and uncertainty in client volumes are worrisome. A rise in expenses will impede its bottom line. We expect non-interest expenses to rise 1% in 2024. Amid geopolitical concerns, high dependence on overseas revenues is a woe. Nonetheless, decent liquidity aids sustainable capital distributions.
The stock is up 15.77% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 9 higher, for fiscal 2024. The consensus estimate has moved up as well.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
