• If you are asking whether Goldman Sachs Group is still reasonably priced after a strong run, this article will walk through what the current valuation signals actually say.
• The stock last closed at US$1,019.61, with the share price down 7.0% over the past week, slightly lower by 0.6% over the past month, and up 11.5% year to date and 50.6% over the past year.
• Recent coverage has focused on Goldman Sachs Group's longer term returns, with the stock up 239.1% over three years and 207.6% over five years. This provides important context for current expectations baked into the price. This mix of short term pullback and strong multi year returns sets the scene for a closer look at whether valuation has kept pace with the business.
• Right now, the company scores 3 out of 6 on Simply Wall St's valuation checks, giving it a value score of 3. The rest of this article will compare different valuation approaches before ending with a broader way to think about what that score really means for you.

Approach 1: Goldman Sachs Group Excess Returns Analysis

The Excess Returns model for Goldman Sachs Group looks at how much value the company can generate over and above the return that equity investors require. Instead of focusing on cash flows, it starts with the balance sheet and earnings power, then estimates how efficiently future equity capital might be used.

For Goldman Sachs Group, the model uses a Book Value of $356.27 per share and a Stable EPS of $66.56 per share, based on weighted future Return on Equity estimates from 15 analysts. The Average Return on Equity is 17.07%, while the Cost of Equity is $36.08 per share, which implies an Excess Return of $30.48 per share. The Stable Book Value is $389.89 per share, using weighted future Book Value estimates from 12 analysts.

Feeding these inputs into the Excess Returns framework produces an intrinsic value estimate of $923.45 per share. Compared with the recent share price of $1,019.61, this indicates that Goldman Sachs Group stock screens as about 10.4% more expensive than the modelled value, so the Excess Returns view is that the stock is overvalued on this basis.

Result: OVERVALUED

Our Excess Returns analysis suggests Goldman Sachs Group may be overvalued by 10.4%. Discover 44 high quality undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Goldman Sachs Group Price vs Earnings

For a profitable company like Goldman Sachs Group, the P/E ratio is a useful shorthand for how much investors are currently paying for each dollar of earnings. It links directly to what you care about as a shareholder, the relationship between today’s price and the company’s earnings power.

What counts as a “fair” P/E usually reflects two broad factors: how quickly earnings are expected to grow over time and how much risk investors see in those earnings. Higher expected growth and lower perceived risk can justify a higher multiple, while slower growth or higher risk can point to a lower one.

Goldman Sachs Group currently trades on a P/E of 18.32x. That sits below the Capital Markets industry average P/E of 39.58x and also below the peer group average of 30.50x. Simply Wall St’s Fair Ratio framework estimates a P/E of 19.67x for Goldman Sachs Group, based on factors such as earnings growth, industry, profit margins, market cap and risk profile. This Fair Ratio can be more helpful than simple peer or industry comparisons because it adjusts for those company specific characteristics instead of assuming one multiple fits all. Comparing the Fair Ratio of 19.67x with the actual P/E of 18.32x suggests the stock screens as slightly undervalued on this metric.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Goldman Sachs Group Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St let you attach your own story about Goldman Sachs Group to the numbers by linking a clear view of the business, a forecast for revenue, earnings and margins, and a Fair Value that you can compare to the current share price to help decide whether to buy, hold or sell. All of this is available within an accessible Community page where different Narratives update automatically as new news or earnings arrive. One investor might build a cautious Goldman Sachs Group Narrative around a Fair Value near US$780.03, while another might build an optimistic one closer to US$1,050. You can see exactly which assumptions sit behind each view and choose the version that best matches your own expectations.

For Goldman Sachs Group, here are previews of two leading Goldman Sachs Group Narratives:

Fair Value: US$1,050.00 per share

Implied gap to Fair Value: current price is about 2.9% below this narrative's Fair Value

Revenue growth assumption: 6.7% a year

• Assumes AI driven efficiency gains, alternative assets and global wealth growth support higher earnings and margins over time compared with consensus expectations.
• Builds in rising fee based revenue from asset and wealth management, plus ongoing share buybacks, as key supports for earnings per share.
• Values Goldman Sachs Group at the upper end of analyst targets, with the current price sitting slightly below this more optimistic Fair Value view.

Fair Value: US$934.19 per share

Implied gap to Fair Value: current price is about 9.1% above this narrative's Fair Value

Revenue growth assumption: 3.2% a year

• Builds on a more moderate revenue and margin path, with earnings growth supported by advisory, asset management and capital light financing, but tempered by regulatory and fee pressure risks.
• Factors in ongoing share repurchases and gradual efficiency gains from AI and digital tools, while highlighting potential headwinds from higher capital requirements and competition for talent.
• Arrives at a Fair Value close to the analyst consensus target, with Goldman Sachs Group currently trading above this more measured narrative.

Whichever Narrative feels closer to your own expectations, the key step is to stress test the revenue, margin, P/E and discount rate assumptions against what you believe is realistic for Goldman Sachs Group over the next few years, then decide how comfortable you are with the current price versus those scenarios.

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Goldman Sachs Group on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Do you think there's more to the story for Goldman Sachs Group? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.