To The Moon

$Goldman Sachs(GS)$

Goldman Sachs is a leading global investment banking, securities, and investment management firm. Its fundamentals are rooted in providing a range of financial services to corporations, financial institutions, governments, and individuals.

Earning Overview

Goldman Sachs reported robust financial results for the fourth quarter of 2024, showcasing significant growth across its business segments. Goldman Sachs reported fourth-quarter revenue of $13.87 billion, surpassing the consensus estimate of $12.39 billion. This marks a 23% year-over-year increase, driven by growth across all business segments, with particularly strong performance in Global Banking & Markets.

For the full year, revenue reached $53.51 billion, reflecting a 16% year-over-year increase and exceeding the consensus estimate of $51.98 billion.

Fourth-quarter 2024 net interest income was $2.35 billion, up 75% year-over-year, due to a shift toward higher-yielding assets, while remaining stable quarter-over-quarter. Average interest-earning assets for the period stood at $1.59 trillion.

Fundamental Analysis

Segment Revenues Overview:

Global Banking & Markets: Revenues reached $8.48 billion, a 33% year-over-year increase. This growth was driven by a 24% rise in investment banking fees to $2.05 billion, supported by higher revenues from Debt and Equity underwriting. The investment banking fee backlog also grew quarter-over-quarter, primarily due to strong activity in Equity underwriting.

Fixed Income, Currency, and Commodities (FICC): Revenues totaled $2.74 billion, up 35% year-over-year, fueled by higher net revenues in FICC intermediation and financing.

Equity: Revenues increased 32% year-over-year to $3.45 billion, reflecting significant growth in both intermediation and financing.

Asset & Wealth Management: Revenue rose 8% year-over-year to $4.72 billion, with total wealth management client assets reaching approximately $1.6 trillion.

Earnings Highlights:

• Goldman Sachs reported fourth-quarter GAAP EPS of $11.95, surpassing the consensus estimate of $8.30. For the full year, GAAP EPS was $40.54, exceeding the consensus forecast of $36.55.

Additional Financials:

Provision for Credit Losses: The fourth-quarter provision for credit losses was $351 million, a 39% decline year-over-year, primarily due to net provisions related to the credit card portfolio, driven by net charge-offs.

Assets Under Supervision (AUS): In the fourth quarter, AUS saw a net inflow of $92 billion. For 2024, total AUS increased by $325 billion, reaching a record $3.14 trillion.

Guidance

Stock Buyback: Goldman Sachs repurchased $2 billion worth of stock during the fourth quarter, bringing its total stock buybacks for the year to $8 billion.

Capital and Book Value: The Standardized CET capital ratio rose to 15%, while the Advanced CET capital ratio increased to 15.4%. The book value per common share grew year-over-year to $336.77, compared to $313.56 in the prior year.

Free Cash Flow

As of the fourth quarter of 2024, Goldman Sachs reported net revenues of $13.87 billion and net earnings of $4.11 billion. However, specific figures for free cash flow (FCF) in Q4 2024 are not readily available. It's important to note that Goldman Sachs' FCF has historically exhibited significant volatility. For instance, in the quarter ending September 30, 2024, the firm reported a negative free cash flow of $60.331 billion.

This volatility is not uncommon in large financial institutions, where cash flows can fluctuate due to various factors, including changes in operating activities, investment decisions, and financing activities. For a more comprehensive understanding of Goldman Sachs' cash flow position in Q4 2024, it would be advisable to review the company's detailed financial statements or consult their official earnings release.

Technical Analysis

Technical analysis indicates the following support and resistance levels:

• Support Levels:

  First Support (S1): $574.73Second Support (S2): $569.43Third Support (S3): $566.20

• Resistance Levels:

  First Resistance (R1): $583.26

  Second Resistance (R2): $586.49

  Third Resistance (R3): $591.78

Risks and Challenges

Market Risks Goldman Sachs is highly exposed to fluctuations in financial markets.

• Volatility: Significant changes in equity, fixed income, commodity, or currency markets can affect trading and investment activities.

• Interest Rate Risk: Shifts in interest rates can impact profitability in lending, trading, and asset management.

Credit Risks Client Defaults: The firm faces risks from clients or counterparties defaulting on loans or financial obligations. Economic Downturns: During recessions, credit losses in the consumer and corporate lending portfolios tend to rise.

Regulatory Risks Stringent Regulations: Compliance with complex and evolving regulations (e.g., Dodd-Frank, Basel III) increases operational costs. Litigation and Fines: Legal disputes or violations of regulations can result in fines, settlements, or reputational damage.

Valuation

In the last two weeks, Oppenheimer reduced its price target for Goldman Sachs from $677 to $639, UBS downgraded the stock to a Neutral rating with a price target of $610, and Barclays raised its price forecast from $588 to $713.

Market sentiment

Over the past 12 months, Goldman Sachs' stock has surged 50%, significantly outperforming the S&P 500 and the Dow.

Economic Outlook: Goldman Sachs Research forecasts another solid year of global economic growth in 2025. Their economists project that the U.S. will outperform expectations, contributing to a favorable environment for financial institutions like Goldman Sachs.

Equity Market Performance: The firm projects that the S&P 500 index will reach 6,500 by the end of 2025, indicating a 9% price gain from its current level and a 10% total return when including dividends.

Interest Rates and Monetary Policy: Goldman Sachs anticipates that the Federal Reserve will continue rate cuts through the first quarter of 2025 before slowing the pace toward the end of the year. This monetary policy is expected to support economic growth and, by extension, the financial sector.

Conclusion

In summary, the Goldman Sachs in 2025 is positive, underpinned by strong economic forecasts, substantial stock buyback programs, and favorable monetary policies. These factors collectively suggest a supportive environment for the company's performance throughout the year.

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