GS Price Forecast Based on Dividend Discount Model

For dividend yielding stocks, the Dividend Discount Model (DDM) is a common valuation tool; it attempts to extrapolate a fair share price based primarily on the dividend the stock provides relative to a number of other quantiative aspects of its business. As for GS, the DDM model generated by StockNews estimates a return of negative 52.03% in comparison to its current price. Digging deeper, the aspects of Goldman Sachs Group Inc's dividend discount model that we found most interesting were:

• If we compare the valuation opportunity a dividend discount model provides relative to other dividend stocks in the Financial Services sector, the expected return of -52.03%, based on the stock's current share price and target price based on a dividend discount model, is greater than only 25% of the DDM-forecasted return of its its sector peers.
• Compared to all dividend issuing stocks in our set, GS has a discount rate lower than only 25% of them (a lower discount rate is associated with lower risk).
• With a market cap of roughly $70 billion, GS is in the large-sized market cap class; amongst this group of stocks, its equity discount rate is lower than 25.69% of them.
• A stock's beta generally indicates its volatility relative to the broader equity market; as for GS, approximately 26.76% of US-listed dividend issuers had a higher beta, and thus may have greater price volatility.

GS Dividends vs. Peers