(GS) The Goldman Sachs Group Inc. – Trades at a Valuation Below Overall Market

October 19th, 2009

The Goldman Sachs Group Inc. (GS) posted better than expected 3rd-quarter results on Oct 15 that were driven by strength in fixed-income trading, helping to offset weakness in investment banking.

3rd-Quarter Results

Revenue was up 10% from last quarter and more than double last year’s at $12.4 billion. Earnings also came in strong at $5.25 per share, $1.12 ahead of the Zacks Consensus Estimate. Goldman has beat in each of the last 2 quarters by an average of 34%.

Strength in the company’s trading division, with revenues totaling $10 billion helped make up for a 38% decline in Goldman’s investment banking division. The company also noted that its Tier 1 capital ratio, a key regulatory financial metric Incorporatedreased to 14.5% from 13.8%.

Estimates and Valuation

Based on the current-year estimate of $17.70, shares of GS trade with a P/E of 10X, a discount to the overall market.

The Chart

Shares of Goldman have been posting big gains since bottoming out in November of last year. Take a look at the smooth trend higher in the chart below.

Zacks Investment Research
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Read more on Goldman Sachs Group at Wikinvest

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