Goldman Sachs Stock May Be Overvalued After Strong Three-Year Run

Goldman Sachs Group's stock has had a strong three-year run, but current checks suggest it may be closer to fairly valued than previously thought. According to intrinsic value estimates, the stock is only modestly undervalued by about 7.8%, which is lower than its peak valuation.

The Excess Returns model uses a book value of $362.05 per share and a stable earnings figure of $78.12 per share based on return on equity estimates from 13 analysts. With an average return on equity of 19.21% and an estimated cost of equity of $37.76 per share, the model arrives at an excess return of $40.35 per share.

The agreed LCN Capital Partners acquisition fits this picture because it adds to fee-based activity that can help sustain returns on equity. On this Excess Returns view, Goldman Sachs Group stock appears roughly fairly valued, with only a small margin of upside relative to the current share price of around $1,040.