< Return to Bulls page"Stock price has been pulled down by the rest of the market, but it is still a money-generating machine"
As on March 5th, the weakness in the overall economy has brought a wave of selling, cutting the best performing market stocks, contracting P/E ratios and pessimistic earnings outlooks have been the main culprits over the last quarter and Goldman Sachs has been no exception. Although Analysts still hold a high regard for the company, it has been difficult getting any momentum back for the shares. Falling from a high of over $250 to its current values makes for a 40% valuation hit. While that is in line with virtually all of its peers in the financial business Goldman has proven with its track record to just simply be more flexible, better managed, and in fact smarter than the other Investment Firms.
While earnings expectations have been toned down this year to around $19-$20 and $22-$23 next year, there is no reason for Goldman to be trading in the 7 P/E range. Even though 2008 profitability is expected to be lower than 2007, it still only values Goldman with a FP/E in the 8/9 range. This is a company that had over a trillion dollars worth of assets on its balance sheet at the end of 2007. It made almost $12 b illion in profit on revenue of $88 billion. Just staggering at the money machine that is this bank, moving in all sorts of Investment directions.
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