Moelis & Company vs. Goldman: Which Finance Stock Has Better Upside?

Core Insights - The article compares Goldman Sachs (GS) and Moelis & Company (MC), highlighting their distinct business models within the investment banking industry, with GS being a global financial giant and MC being a focused advisory-driven boutique [1][2]. Goldman Sachs (GS) - GS maintains a leadership position in global investment banking, particularly in M&A advisory, equity, and debt underwriting, with a 24% increase in IB revenues in 2024 due to a rebound in corporate financing activity [3]. - However, GS experienced an 8% decline in IB revenues in Q1 2025, attributed to market turmoil and uncertainty over monetary policy, though its leading position in deal-making suggests enduring client trust [4]. - The firm is strategically exiting lower-margin consumer finance businesses to focus on high-return sectors like investment banking and trading, including ending its partnership with Apple on the Apple Card and Apple Savings account [5]. - Goldman Asset Management aims for aggressive growth in private credit, targeting a portfolio of $300 billion by 2030, reinforcing its long-term growth potential [6]. Moelis & Company (MC) - MC demonstrates resilient performance driven by its high-quality advisory platform, achieving a 10% compound annual growth rate (CAGR) over five years despite revenue declines in 2019, 2022, and 2023 [7]. - The company is well-positioned to benefit from structural tailwinds in M&A and capital advisory, with elevated corporate debt levels driving demand for restructuring services [8]. - MC's business is diversified across various sectors and geographies, with no significant client concentration, and has advised on over $5.1 trillion in transactions since inception [9]. - MC projects a 42.4% year-over-year earnings growth for 2026, significantly outpacing GS's projected 13.1% growth, and offers a higher dividend yield of 4.64% compared to GS's 1.92% [10][22]. Performance and Valuation Comparison - Over the past year, GS shares gained 38.7%, while MC shares increased by 7.5%, both outperforming the industry average rise of 33.1% [11]. - GS is currently trading at a forward P/E of 13.26X, higher than its five-year median of 10.16X, while MC trades at a forward P/E of 25.65X, above its five-year median of 20.16X [14]. - Both companies have dividend yields exceeding the industry average, with MC having a notable edge [16]. Estimates and Growth Potential - The Zacks Consensus Estimate for GS indicates a revenue rise of 3.8% and 5.1% for 2025 and 2026, respectively, with earnings growth of 9.6% and 13.1% [19]. - In contrast, MC's estimates reflect a revenue increase of 2.8% and 20.9% for 2025 and 2026, with earnings growth of 0.6% and 42.4% [20]. - MC's advisory-driven model aligns well with the rising demand for restructuring services, indicating significant long-term potential [21][22]. - Despite trading at a premium valuation, MC's market capitalization of $4.4 billion compared to GS's $188.3 billion suggests more room for growth [23].