Goldman Sachs

Methodology

Goldman Sachs' investment banking and trading operations create highly cyclical earnings tied to market volatility, M&A activity, and capital markets issuance. The company's wealth management and asset management businesses provide some stability. This calculation is challenging given cyclicality—normalized assumptions about mid-cycle trading revenue and deal activity provide more reliable estimates than peak or trough investment banking environments.

Methodology

Goldman Sachs often shows attractive PEG ratios for an elite investment bank, but earnings growth is cyclical and can mislead. The company's sensitivity to capital markets activity means growth accelerates during favorable conditions and contracts during downturns. For Goldman, valuation based on return on tangible equity and price-to-tangible-book relative to cycle positioning provides more insight than earnings-based PEG ratios.

Methodology

Goldman Sachs pays a meaningful dividend that varies with profitability and regulatory capital requirements. The company's capital return depends on sustained trading and banking revenues. PEGY is somewhat relevant for total return assessment, though for investment banks, quarterly earnings volatility and cycle timing matter more than dividend-adjusted metrics in determining valuation attractiveness.