Key Takeaways Goldman Sachs stock surged 57.3% over 12 months, outpacing JPMorgan and Morgan Stanley. GS reported IB revenue decline in Q1 2025 but holds a strong M&A backlog and leads in advisory market share. The Fed's capital relief proposal may boost GS' ROE and fund growth in IB, trading and AWM segments.The Goldman Sachs Group, Inc. (GS) shares have surged 57.3% over the past year, outperforming the industry's 40.9% growth. Its peers, JPMorgan (JPM) and Morgan Stanley (MS) , shares rose 48.4% and 50 ...

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].

Core Viewpoint - The investment banking landscape is evolving, with Evercore Inc. and The Goldman Sachs Group Inc. gaining investor attention due to their distinct service offerings in mergers and acquisitions, capital markets, and wealth management [1]. Investment Banking Sector Overview - The long-term outlook for the investment banking sector remains favorable, but near-term momentum has moderated due to market volatility and concerns over economic slowdown and inflation [2]. - The anticipated recovery in M&A activity is expected to occur in the latter half of 2025 [2]. Goldman Sachs Analysis - Goldman Sachs maintains a leadership position in global banking and markets, with a 24% year-over-year increase in IB revenues in 2024, driven by corporate debt and equity issuances [3]. - However, IB revenues declined by 8% year-over-year in Q1 2025 due to market uncertainty and a slowdown in M&A activities [3][4]. - Goldman is strategically exiting its non-core consumer banking business to focus on higher-margin areas like investment banking and trading, including ending its partnership with Apple [5][6]. - The company has divested several consumer finance businesses to enhance its focus on scalable core businesses [6]. Evercore Analysis - Evercore, while smaller, generates 95.9% of its revenues from Investment Banking and Equities, with a CAGR of 8.6% from 2017 to 2024 [7]. - The company is actively increasing its staff in the IB sector, employing 197 senior managing directors as of March 31, 2025, to support revenue growth [8]. Price Performance and Valuation - Over the past six months, Goldman shares fell by 0.1%, while Evercore shares dropped by 28.7%, against an industry growth of 0.8% [9]. - Goldman is trading at a 12-month forward P/E of 12.72X, higher than its five-year median of 10.17X, while Evercore trades at 18.06X, above its five-year median of 12.40X [11]. - Evercore's valuation is at a premium compared to the industry average of 13.73X, while Goldman is trading at a discount, making it a better choice for value investors [14]. Dividend Yield - Evercore has a dividend yield of 1.43%, while Goldman has a higher yield of 2.02%, both exceeding the industry average of 1.12% [14]. Earnings Estimates - The Zacks Consensus Estimate for Goldman suggests year-over-year revenue increases of 7.7% and 6% for Q2 and Q3 2025, respectively, with earnings growth of 13.9% and 20.9% [18]. - Conversely, Evercore's estimates indicate a revenue decline of 7.1% and 1.2% for the same quarters, with earnings declines of 22.7% and 3.4% [20]. Strategic Positioning - Despite near-term challenges, Goldman is well-positioned with an increased backlog and diversified revenue base, providing resilience that Evercore lacks during volatility [21]. - Goldman’s focus on high-return segments and divestitures is improving operational focus and profitability [22].