If you're asking yourself what to do with Goldman Sachs Group right now, you're not alone. The stock has seen a striking journey over the past few years, up nearly 319% over five years, and a powerful 169% jump in the last three years alone. Even pulling back just 2% in the last month, and a modest 4.1% in the last week, those are minor blips on an otherwise steep climb. Long-term holders are sitting on hefty gains, while new investors are weighing their entry points in light of the company's recent momentum.

Behind these numbers, wider market trends have given financial stocks, including Goldman Sachs, a noticeable tailwind. Shifting interest rates, evolving risk appetites among institutional investors, and a broader appetite for large, diversified banks have all played a part in the company's recent trajectory. It is clear that the market's perception of risk and reward around big financials is changing.

But before making any big decisions, it's crucial to consider valuation. Is Goldman Sachs actually a bargain, or have recent gains left it overpriced? Our analysis runs the company through six distinct valuation checks. Currently, Goldman Sachs earns a value score of 3, meaning it passes three out of six important undervaluation tests. What do these checks actually mean for your decision? In the next section, we will break down each approach and hint at an even deeper way to measure value that you will not want to miss at the end of this article.

Goldman Sachs Group delivered 49.2% returns over the last year. See how this stacks up to the rest of the Capital Markets industry.

Approach 1: Goldman Sachs Group Excess Returns Analysis

The Excess Returns valuation model measures how much value Goldman Sachs Group is generating above its cost of equity. Essentially, it calculates the difference between the company's expected returns on shareholder equity and the minimum return investors require for the risk they take. This approach focuses less on cash flow and more on profitability, capital allocation, and growth of the company's equity base over time.

For Goldman Sachs Group, the key valuation metrics are impressive. The current Book Value amounts to $344.06 per share, while the Stable Earnings Per Share (EPS) is estimated at $55.74, based on input from 12 analysts. The company's calculated Cost of Equity is $36.60 per share, so the Excess Return, or income generated above that cost, is $19.14 per share. Over the long term, Goldman's Average Return on Equity stands at 14.89%, and analysts expect the Stable Book Value to reach $374.35 per share in the future, according to projections from 13 analysts.