Goldman earned a 20.7% return on equity in the first nine months of FY26, but $893 needs 21% forever. I see profit fading to $58.00 per share in FY27 for a $783 target.
Key points
- $6.44B equities revenue in Q3 FY26, up 72% from Q3 FY25 on derivatives and record client financing in Q3 FY26.
- $4.10T assets under supervision in Q3 FY26 after $97B long term inflows in Q3 FY26, lifting fees to $3.59B in Q3 FY26.
- 12.4% capital ratio in Q3 FY26, only 1.0 point above the 11.4% minimum in Q3 FY26 after assets hit $2.18T in Q3 FY26.
The call
The market expects perfection at $893.00 on Oct 13 2026. The price is 2.6 times tangible book in Q3 FY26, or net worth without intangibles. That needs a 21% return on equity forever from Q3 FY26 on, or profit as share of net worth.
At $893 the price needs a 21 pct return forever ($)Oct 13 2026 release; TBV $341.43; 10.5 pct cost of equity, 4 pct growth.
Earnings will fade as trading normalizes in FY27. Client financing hit $3.37B in Q3 FY26. I expect $58.00 profit per share in FY27. That is down from $69.55 trailing to Oct 13 2026.
Net revenue peaked in Q2 and faded in Q3 ($ billions)Company releases Oct 2024 to Oct 2026; E is author's estimate.
Valuation
| Driver | Estimate |
|---|
| Profit per share in FY27 | $58.00 per share |
| Target multiple for FY27 | 13.5 times earnings |
| Implied value in 12 months | $783.00 per share |
| Cash dividend in next 12 months | $20.00 per share |
| Total return to Oct 13 2027 | -10.1% with dividend |
| A 13.5 multiple for FY27 fits a 15% return through FY27. Peers trade near 12 to 15 times cycle earnings in 2026. Downside tops upside if financing margins fade in FY27. | |
Risks
- Trading slumps if volatility drops, which you would see in lower industry options volume and narrower prime balances.
- Credit losses jump if large loans impair, which you would see in higher provisions and loan disclosures in the next filing.
- Capital rules tighten if buffers rise, which you would see in a higher required ratio and slower buybacks.
What would change my mind
Sustained 18% returns through FY27 on durable fees without balance sheet growth would support a higher multiple.