At $893, Goldman trades at 2.4 times book value. That needs a return on equity of about 17% to hold up, and I expect 16.5% in 2027 as fees from deals and trading ease from their peak. My target is $917.67, a hold.
Key points
- 2.4 times book value: at $893, the stock needs a return on equity (profit as a share of shareholders' money) of about 17% to hold up.
- 18.7% return in Q3 2026, down from 20.7% for the first nine months, and the deal backlog fell during the quarter.
- $63 a share is my 2027 earnings estimate, below this year's pace of about $70.
The call
The price expects most of this boom to last. At 2.4 times book value of $372.64 a share, the market is pricing returns near 17% for years. That means about 14 times my 2027 earnings. Goldman can do that, but this year's 20% was a peak-cycle result.
Net revenues ($ billions) and diluted EPS per quarter ($)- Net revenues
- Diluted EPS
- My 2027E EPS per quarter
Source: Goldman quarterly earnings releases, Q4 2024 to Q3 2026; 2027E is my quarterly average
I think the price is about right, not too cheap. Prime lending to hedge funds nearly doubled from a year ago, and fund-management fees are growing 22%. Both are steadier than trading gains. Against that, the deal backlog has slipped, the Fed raised rates in September and capital is tighter. Growth in the steady businesses roughly offsets a softer 2027.
Valuation
| Step | Figure |
|---|
| 2027 average common equity | $112 billion |
| 2027 return on equity, my estimate | 16.5% |
| 2027 earnings per share | $63.30 |
| Multiple of earnings | 14.5 times |
| 12-month target | $917.67 |
14.5 times is what the market pays today for earnings this good, and it equals about 2.4 times my 2027 book value. The stock is already down 22% in three months, so much of the cooling is reflected. Each point of return on equity moves the target by about $55, so the risk runs both ways.
12-month value per share at 14.5 times earnings, by 2027 return on equity ($)My arithmetic: $112 billion average common equity, 292 million shares; price $893 on Oct 13, 2026
Risks
- A deal freeze: if the backlog keeps shrinking and Q4 underwriting falls, returns could slip toward 14%, worth about $806 a share.
- Capital squeeze: the main capital ratio fell to 12.4% against an 11.4% minimum. A rise in risk-weighted assets would slow buybacks.
- Credit: Q3 loan losses on corporate borrowers rose to $368 million. Watch whether more single cases show up in Q4.
What would change my mind
A rising deal backlog plus 2027 capital rules that free up buyback room would lift my return estimate toward 18.5% and the target above $1,000.