Goldman Sachs May Be Undervalued by 10% Amid Expansion Plans

Goldman Sachs (GS) stock has performed well over the past three years, delivering a 240% return. However, its valuation models suggest that it may be undervalued by around 10%, according to Sahm's analysis.

The Excess Returns intrinsic value estimate and P/E multiple both point to an undervalued stock. The model estimates that GS is generating more profit per dollar of equity than required, with a Return on Equity (ROE) of 19.21% and a Stable Book Value projection of $406.56 per share.

The acquisition of NEOS Investments, which would expand options-based and crypto ETF income streams, is cited as one factor supporting higher sustained returns on equity. The model estimates that GS stock currently screens as undervalued relative to its estimated intrinsic value, with an Excess Return of $40.55 per share.

However, the mixed outcome from broader valuation checks adds a note of restraint, suggesting investors should not rely solely on this model. The crux now is whether GS can sustain returns on equity that justify the intrinsic value estimate without taking on more balance sheet and off-balance sheet risk than the current discount implies.