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Should You Invest in Goldman Sachs or BlackRock Following Impressive Q4 Earnings Reports?

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Major U.S. banks, including Goldman Sachs GS and BlackRock BLK, reported their fourth-quarter results on Wednesday.

As well-known leaders in asset management, it’s worth analyzing if now is a good time to invest in these New York-based financial giants.

Goldman Sachs Surprises with Strong Earnings

In a busy earnings day, Goldman Sachs stood out with impressive Q4 results. Alongside them, three other major banks—Wells Fargo WFC, Citigroup C, and JPMorgan JPM—also released their figures.

Goldman announced an astonishing earnings per share (EPS) of $11.95, exceeding expectations of $8.07 for a surprising 48% increase. The firm recorded Q4 profits of $4.11 billion, driven by quarterly sales of $13.86 billion, which surpassed estimates by 13%.

The bank attributed these remarkable results to a favorable operating environment. Compared to the same period last year, Q4 earnings doubled while sales rose 22% from $11.31 billion.

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Image Source: Zacks Investment Research

BlackRock Posts Solid Performance

While BlackRock’s Q4 results didn’t feature a significant surprise, they showcased strong financial performance. The company reported EPS of $11.93, exceeding expectations of $11.27, with sales reaching $5.67 billion, slightly above estimates.

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Image Source: Zacks Investment Research

Analyzing year-over-year performance, BlackRock saw over 20% growth in both earnings and sales. The firm also reached a significant milestone with assets under management (AUM) totaling $11.6 trillion, aided by quarterly net inflows of $281 billion.

Reuters
Image Source: Reuters

Annual Overview

BlackRock continues to hold its position as the world’s largest money manager, while Goldman Sachs ended 2024 as a leader in mergers and acquisitions (M&A).

Goldman’s total sales surged 16% for the fiscal year 2024 to $53.51 billion, up from $46.25 billion in 2023. Annual earnings also saw a remarkable increase of over 70%, totaling $14.28 billion or $40.54 per share, making it one of the highest figures in its history since its founding in 1867.

BlackRock’s overall sales reached $20.41 billion, growing 14%, while earnings grew over 15% to $6.37 billion or $43.61 per share. Notably, the firm also reported record annual net inflows worth $641 billion, further solidifying its position in the market.

Stock Performance and Valuation Insights

In the past year, Goldman’s stock increased by 62%, outperforming BlackRock and the S&P 500 Index, which saw gains of 26%. Over the last five years, Goldman has risen 145%, ahead of BlackRock and the broader market which both increased by over 80%.

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Image Source: Zacks Investment Research

Currently, Goldman Sachs trades at a forward price-to-earnings (P/E) ratio of 13.9, which is a discount compared to BlackRock, trading at approximately 21.2.

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Image Source: Zacks Investment Research

Final Thoughts

Given Goldman Sachs’ more attractive valuation and the likelihood of rising earnings estimates following their strong Q4 surprise, the stock is rated as Zacks Rank #2 (Buy), while BlackRock holds a Zacks Rank #3 (Hold).

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The Goldman Sachs Group, Inc. (GS) : Free Stock Analysis Report

BlackRock (BLK) : Free Stock Analysis Report

Wells Fargo & Company (WFC) : Free Stock Analysis Report

JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report

Citigroup Inc. (C) : Free Stock Analysis Report

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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.

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