Learning how to research Goldman Sachs stock means going beyond the ticker price and building a layered understanding of the company. A solid approach starts with the business model, then moves into financial statements, valuation metrics, competitive positioning, and risk factors. That sequence gives you structure, and structure is what separates casual browsing from real GS due diligence.
Key takeaways
- Goldman Sachs operates across four main segments, and understanding each one's revenue mix is the first step in any Goldman Sachs research guide.
- Financial health for a bank means examining capital ratios, net interest income, and provision for credit losses rather than standard metrics like free cash flow.
- Valuation for financial institutions relies heavily on price-to-book and price-to-tangible-book, not price-to-sales.
- Competitive position depends on market share in investment banking fees, trading revenue, and the growing asset and wealth management business.
- Risk factors for GS span regulatory exposure, interest rate sensitivity, litigation history, and cyclical revenue streams tied to capital markets activity.
Step one: How do you break down Goldman Sachs' business model?
Before you touch a single financial ratio, you need to understand what Goldman Sachs actually does to make money. This sounds obvious, but many investors skip straight to earnings without knowing which segments drive them. Goldman operates through four primary segments: Global Banking and Markets, Asset and Wealth Management, Platform Solutions, and a legacy segment that has shifted over the years. The first two generate the bulk of revenue.
Global Banking and Markets includes investment banking advisory fees, underwriting, and the firm's trading desks across fixed income, currencies, commodities, and equities. This is the heart of what most people think of when they hear "Goldman Sachs." But it's also the most cyclical. When deal activity slows or trading volumes drop, this segment feels it fast.
Asset and Wealth Management is the firm's push toward more stable, fee-based recurring revenue. This includes managing money for institutions, high-net-worth individuals, and retail clients. The fee structure here tends to be stickier, which is why Goldman's leadership has been vocal about growing this segment's share of total revenue.
Revenue mix: The percentage of total revenue each business segment contributes. Shifts in revenue mix over time tell you where management is investing and where the company is headed strategically.
To map this out yourself, pull the company's most recent 10-K filing from the SEC's EDGAR database. Look at the segment reporting section. Compare segment revenue and pre-tax earnings across several annual periods to spot trends. You can also start with the Goldman Sachs stock page on Rallies.ai for a quicker overview before digging into filings.
How to analyze GS financial statements like a bank, not a tech company
Here's the thing about researching financial institutions: the standard metrics you'd use for, say, a software company don't translate well. Goldman Sachs doesn't report "cost of goods sold" or "gross margin" in any meaningful way. Instead, you're looking at a different toolkit entirely.
Income statement priorities
Focus on net interest income (the spread between what GS earns on loans and investments versus what it pays on deposits and borrowings), trading revenue, and investment banking fees. Compensation expense as a percentage of net revenue is another number worth tracking. Goldman has historically run a compensation ratio in a range that reflects Wall Street's talent-driven cost structure. If that ratio moves significantly, it tells you something about margin pressure or efficiency gains.
Balance sheet priorities
For banks, the balance sheet matters more than it does for most companies. Look at:
- Common Equity Tier 1 (CET1) ratio — this measures how much high-quality capital the bank holds relative to its risk-weighted assets. Regulators set minimums, and Goldman needs to stay well above them.
- Tangible book value per share — this is your anchor for valuation (more on that below).
- Provision for credit losses — how much the bank sets aside for loans it expects to go bad. Rising provisions can signal management expects economic conditions to worsen.
CET1 ratio: A bank's core capital expressed as a percentage of risk-weighted assets. It's the primary measure regulators use to assess whether a bank can absorb losses. Higher is generally safer, but too high may mean the bank isn't deploying capital efficiently.
You can find all of this in quarterly earnings supplements, which Goldman publishes alongside its 10-Q filings. The supplements are often more readable than the filings themselves.
Valuation: What metrics matter for how to research Goldman Sachs stock?
Price-to-earnings (P/E) gets all the headlines, but for a bank like Goldman Sachs, price-to-tangible-book-value (P/TBV) is the more telling metric. Here's why: banks are essentially leveraged balance sheets. Their assets and liabilities are financial instruments, not factories or patents. Tangible book value gives you a cleaner estimate of what shareholders would receive in a liquidation scenario, minus goodwill and intangible assets.
When a bank trades above 1x tangible book, the market is saying it expects management to generate returns on equity above the cost of capital. When it trades below 1x, the market is skeptical. Goldman has historically traded in a range that reflects its position as one of the higher-return franchises in banking, but that premium fluctuates with market cycles.
- P/TBV — your primary valuation anchor. Compare it to Goldman's own historical range and to peers like Morgan Stanley or JPMorgan.
- Return on tangible common equity (ROTCE) — this is the profitability metric that justifies (or undermines) the P/TBV multiple. If ROTCE is above the cost of equity, the stock should trade above book.
- P/E ratio — still useful for quick comparisons, but less reliable for banks because earnings can swing dramatically with trading revenue and provision charges.
ROTCE (Return on Tangible Common Equity): Net income available to common shareholders divided by average tangible common equity. For banks, this is the gold-standard profitability metric. It tells you how effectively the bank turns its equity base into profits.
A good habit is to chart P/TBV against ROTCE over multiple years. That relationship tells you whether the stock's valuation is justified by its actual profitability, or whether sentiment has gotten ahead of fundamentals.
Competitive position: Where does Goldman Sachs stand?
Goldman's competitive moat comes from three places: brand and relationships, talent, and institutional infrastructure. In investment banking, league table rankings for M&A advisory and equity/debt underwriting give you a rough proxy for market share. Goldman consistently ranks near the top globally, but the margins between top-tier players can be thin.
In trading, the picture is more nuanced. Goldman's fixed income and equities desks compete against JPMorgan, Morgan Stanley, Citigroup, and a handful of European banks. Market share in trading can shift quarter to quarter based on risk appetite and client flow. Look at trading revenue trends over rolling four-quarter periods rather than any single quarter.
The competitive dynamic worth watching most closely is asset and wealth management. Goldman is a relative latecomer to the scale wealth management game compared to Morgan Stanley (which acquired E*TRADE and Eaton Vance) or Bank of America (which owns Merrill Lynch). Goldman's strategy has been to grow organically and through targeted acquisitions, but it's competing against firms with larger established client bases.
To compare these dimensions, the Rallies.ai Vibe Screener lets you filter financial stocks by profitability and valuation metrics so you can see where GS sits relative to peers without manually pulling data from multiple sources.
Risk factors you can't afford to skip in your GS due diligence
Every company has risks, but bank risks are specific and sometimes hard to spot if you're not looking for them.
Regulatory risk
Goldman Sachs is a global systemically important bank (G-SIB), which means it faces higher capital requirements, annual stress tests, and more regulatory scrutiny than smaller banks. Changes in capital requirements can directly affect how much Goldman can return to shareholders through buybacks and dividends. The stress test results, published annually by the Federal Reserve, are worth reading. They tell you the minimum capital Goldman needs to maintain and how much buffer it has.
Interest rate sensitivity
Unlike pure commercial banks, Goldman's earnings are less tied to net interest margins and more tied to capital markets activity. But interest rates still matter. Higher rates can slow deal-making (because financing costs rise), which hurts investment banking fees. They can also affect the value of fixed income trading inventory. The relationship between rates and Goldman's earnings is indirect but real.
Revenue cyclicality
This is the big one. A significant portion of Goldman's revenue depends on capital markets being active. Bull markets, high IPO volumes, and M&A booms are great for Goldman. Bear markets and credit crunches are not. When you're assessing risk, ask yourself: how much of Goldman's revenue disappears in a bad year? Look at historical revenue during downturns to calibrate your expectations.
Litigation and operational risk
Large banks accumulate legal liabilities. Goldman has faced notable settlements in the past, and the 10-K filing's legal proceedings section is worth reading even though it's dense. Large pending litigation can result in material charges.
How to put the Goldman Sachs research guide into practice
Now that you have the framework, here's the sequence that makes sense for doing this research efficiently:
- Business model first. Read the 10-K's business description and segment reporting. Understand what each segment does and how much it contributes.
- Financial statements next. Pull three to five years of annual data. Focus on CET1, ROTCE, compensation ratio, provision trends, and net revenue by segment.
- Valuation. Calculate P/TBV and P/E. Compare to Goldman's own history and to peers. Chart P/TBV against ROTCE to see if the valuation makes sense.
- Competitive position. Check league table rankings for investment banking. Compare trading revenue trends versus Morgan Stanley and JPMorgan. Assess progress in asset and wealth management.
- Risks. Read the risk factors section of the 10-K. Check the latest stress test results. Review the legal proceedings section for pending litigation.
You don't need to do all of this in one sitting. Spread it over a few sessions. The goal is to build a mental model of the company that's robust enough that new information (an earnings report, a regulatory change, a market shift) slots into your existing framework rather than forcing you to start from scratch.
If you want to accelerate parts of this process, the Rallies AI Research Assistant can help you pull together summaries, compare metrics, and stress-test your assumptions by asking follow-up questions in plain language.
Try it yourself
Want to run this kind of analysis on your own? Copy any of these prompts and paste them into the Rallies AI Research Assistant:
- Walk me through a complete due diligence framework for researching Goldman Sachs — what should I look at beyond just the stock price to understand their business model, competitive position, and financial health?
- If I'm researching Goldman Sachs for the first time, what's the step-by-step process? What should I look at first?
- How does Goldman Sachs' return on tangible equity compare to Morgan Stanley and JPMorgan, and what does that tell me about its valuation?
Frequently asked questions
What is GS due diligence, and how is it different from just checking the stock price?
GS due diligence means systematically evaluating Goldman Sachs' business model, financial health, valuation, competitive position, and risk profile. Checking the stock price tells you what the market thinks right now. Due diligence helps you form your own view of whether that price reflects the company's fundamentals. The two complement each other, but price alone is never enough.
What financial ratios matter most when you research Goldman Sachs stock?
For banks like Goldman, price-to-tangible-book-value (P/TBV), return on tangible common equity (ROTCE), and the CET1 capital ratio are the most informative. P/E is useful for quick comparisons but can mislead because bank earnings swing with trading revenue and credit provisions. The compensation ratio (compensation expense as a percent of net revenue) is another bank-specific metric worth tracking.
Where can I find Goldman Sachs' financial filings?
The SEC's EDGAR database has all of Goldman's 10-K (annual) and 10-Q (quarterly) filings. Goldman also publishes earnings supplements on its investor relations website, which are often easier to read than the raw filings. For a faster starting point, the GS research page on Rallies.ai compiles key data in one place.
How does Goldman Sachs compare to Morgan Stanley?
Both are major investment banks, but their revenue mixes have diverged. Morgan Stanley has leaned more heavily into wealth management through acquisitions, giving it a larger base of recurring fee income. Goldman has been building its wealth and asset management business organically but still derives a larger share of revenue from trading and investment banking. Comparing their ROTCE and P/TBV side by side gives you a useful read on how the market values each strategy.
What are the biggest risks of investing in Goldman Sachs?
The main risks are revenue cyclicality (earnings drop when deal-making and trading volumes slow), regulatory changes (higher capital requirements can limit shareholder returns), interest rate impacts on capital markets activity, and litigation exposure. Goldman's G-SIB designation also means it faces stricter oversight than smaller financial institutions. None of these risks are reasons to avoid researching the stock, but they need to factor into any assessment.
Is there a Goldman Sachs research guide for beginners?
The framework in this article works whether you're a beginner or experienced. Start with understanding the business segments, then layer in financial analysis, valuation, competitive comparisons, and risks. Beginners may want to use tools that summarize filings and metrics rather than reading raw 10-K documents from scratch. The Rallies AI Research Assistant is built for exactly this kind of guided research.
Bottom line
Knowing how to research Goldman Sachs stock means building a framework that covers the business model, bank-specific financials, the right valuation metrics, competitive standing, and real risks. That sequence gives you an informed perspective that a stock chart alone never will. Each step builds on the previous one, and the whole picture is what matters.
If you're ready to put this framework into action, start with the Rallies.ai guides for more step-by-step research walkthroughs, or jump straight into the Research Assistant to ask your own questions about GS.
Disclaimer: This article is for educational and informational purposes only. It does not constitute investment advice, financial advice, trading advice, or any other type of advice. Rallies.ai does not recommend that any security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. All investments involve risk, including the possible loss of principal. Past performance does not guarantee future results. Before making any investment decision, consult with a qualified financial advisor and conduct your own research.
Written by Gav Blaxberg, CEO of WOLF Financial and Co-Founder of Rallies.ai.
