Goldman Shares Skyrocket to All-Time High: Here's What's Behind It

The Goldman Sachs Group GS shares hit an all-time high of $714.30 during yesterday’s trading session, after clearing the 2025 Federal Reserve’s stress test. Post-clearing the stress test, GS has the flexibility to return excess capital to shareholders via dividends and share repurchases.

The Fed's 2025 stress test scenario modelled a 10% unemployment rate, a 33% drop in home prices and a 50% equity market decline — a severe simulated recession. Aggregate simulated losses across the group totaled more than $550 billion; yet, banks remained well-capitalized with common equity tier 1 (CET1) ratios far above the 4.5% minimum.

Goldman’s projected CET1 capital ratio stood at a solid 12.3%. This indicates that the bank can withstand a severe recession with plenty of capital on hand to absorb hundreds of billions of dollars in losses.

At present, GS offers a 1.7% dividend yield. Goldman has a 28% payout ratio. In July 2024, following the release of 2024 stress test results, the company raised its quarterly dividend 9.1% to $3 per share. Given its strong capital position, we expect another dividend increase this year.

Additionally, Goldman has a share repurchase plan in place. In the first quarter of 2025, the board of directors approved a share repurchase program authorizing additional repurchases of up to $40 billion of common stock. In February 2023, it announced a share repurchase program, authorizing repurchases of up to $30 billion of common stock with no expiration date. At the end of the first quarter, GS had $43.6 billion worth of shares available under authorization.

As of March 31, 2025, cash and cash equivalents were $167 billion, and $71 billion were near-term borrowings. Given strong liquidity, GS will likely continue to reward its shareholders handsomely.

GS’ Peers Also Clear Fed Stress Test

Apart from GS, 21 banks, including JPMorgan JPM and Bank of America BAC, passed the 2025 Fed stress test.

JPMorgan’s projected CET1 capital ratio stood at a solid 14.2%, while Bank of America’s projected CET1 capital ratio stood at 10.2%, far above the 4.5% minimum required.

Currently, Bank of America offers a 2.20% dividend yield while JPMorgan has a dividend yield of 1.93%. After clearing the 2024 stress test, Bank of America raised its quarterly dividend by 8.3% to 26 cents per share. On the other hand, in March 2025, JPM raised its quarterly dividend by 12% to $1.40 per share after a 9% dividend hike in September 2024.

Further, after clearing the 2024 stress test, JPMorgan authorized a new share repurchase program of $30 billion. As of March 31, 2025, almost $11.7 billion in authorization remained available. Similarly, Bank of America authorized a $25-billion stock repurchase program, effective Aug. 1, 2024. As of March 31, 2025, authorization of $14.4 billion was available. 

Given their strong capital position, both BAC and JPM’s capital distribution plans seem sustainable.

Goldman’s Price Performance, Valuation & Estimates

GS shares have gained 24.8% year to date compared with the industry’s growth of 19.2%. 

Price Performance

From a valuation standpoint, Goldman trades at a forward price-to-earnings (P/E) ratio of 14.99X, above the industry’s average of 14.72X.

Price-to-Earnings F12M

The Zacks Consensus Estimate for GS’s 2025 and 2026 earnings implies year-over-year rallies of 8.8% and 14.1%, respectively. The Zacks Consensus Estimate for GS’s 2025 and 2026 sales implies year-over-year increases of 3.3% and 5.9%, respectively. The earnings estimates for 2025 have been revised downward over the past 30 days, while the same for 2026 have been revised upward.

Estimates Revision Trend

Goldman currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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