GS: Record $51 EPS Year Meets Geopolitical Slide

Goldman's trailing P/E of 16.1x represents a notable compression from the 18-20x range it commanded near its highs. For context, the stock traded at 9.2x earnings as recently as Q1 2025, meaning even at current levels, the market has substantially re-rated the franchise.

The [price-to-book ratio](/posts/2026-02-22/deep-dive-price-to-book-ratio-how-to-use-pb-to-find-undervalued-stocks) of 2.2x sits above the 1.0x threshold that historically signals investor confidence in a bank's ability to earn above its cost of equity. Goldman's tangible book value of $313.40 per share implies a price-to-tangible-book of 2.6x.

At a market capitalisation of $247.6 billion, Goldman is priced at roughly 2x its annual revenue — a premium that reflects the high-return nature of investment banking and trading revenues versus traditional lending.

Goldman's 2025 results were exceptional by any measure. Quarterly EPS ranged from $10.95 to $14.21, with no single quarter falling below double digits — a first in the bank's public history.

Revenue was remarkably consistent, ranging from $30.1 billion to $32.2 billion per quarter. Full-year revenue of approximately $125.1 billion represented a step-change from prior years.

Q4 net income of $4.62 billion was achieved on an effective tax rate of 21.1%. The slight revenue dip in Q4 from Q3 levels reflects normal seasonality in trading and advisory activity.

Goldman's book value per share of $399.74 provides substantial downside protection. The Q4 current ratio of 1.21 indicates adequate short-term liquidity, though bank balance sheet ratios are less informative than for industrial companies due to the nature of financial assets and liabilities.

[Return on equity](/posts/2026-02-24/deep-dive-what-is-return-on-equity-roe-how-to-calculate-it-the-dupont-framework-and-what-it-reveals-about-management-effectiveness) of 3.7% in Q4 translates to approximately 14.7% annualised, comfortably above the 10-12% cost of equity typically assigned to global investment banks. This ROE sustainment above cost of equity is the core driver of the price-to-book premium.

Goldman's [dividend yield](/posts/2026-03-02/dividend-yield-what-it-tells-you-about-income) of 0.53% is modest, with a payout ratio of 31.7% in Q4 providing ample room for increases. The bank has been an aggressive share repurchaser, with weighted average diluted shares declining from 324.5 million in Q1 to 317.6 million in Q4 — a 2.1% reduction in just three quarters.

Goldman Sachs Alternatives — the bank's private equity, credit, and real assets arm — has emerged as the growth engine of the franchise. Recent deals highlight the pace of deployment: a majority investment in Mace Consult for infrastructure services, a strategic partnership with cybersecurity firm Schellman, and a $65 million Series C lead into Sage, an AI-powered senior care platform.

These investments reflect Goldman's strategic pivot toward recurring management fees and carried interest, which carry higher multiples than volatile trading revenues. The Alternatives business now manages over $300 billion in assets, providing a durable fee stream that smooths earnings volatility.

In investment banking, Goldman maintains its position as the top-ranked global M&A advisor. With IPO markets beginning to thaw and a robust pipeline of sponsor-backed exits, advisory revenues could accelerate through 2026.