Goldman Sachs Tightens Grip as Dow's Poorest Performer

Investing

Published: October 6, 2018 8:40 am

Last Updated: January 11, 2020 4:48 pm

Goldman Sachs Group Inc. (NYSE: GS) saw its share price rise a bit last week, but the gain was not enough to lift the stock out of the Dow cellar. Goldman’s shares added 0.66% last week, but the stock is still down 11.4% for the year to date.

The second-worst Dow Jones industrials stock so far this year is DowDuPont Inc. (NYSE: DWDP), which is down 11.4%. That is followed by Procter & Gamble Co. (NYSE: PG), down 11.3%, then 3M Co. (NYSE: MMM), down 10.6%, and Walmart Inc. (NYSE: WMT), down 5.5%. Of the 30 Dow stocks, 11 have traded lower for 2018.

The blue-chip index dropped just over 11 points last week to close at 26,447.05, essentially flat compared to the previous Friday’s close. For the year to date, the index is up 6.5%, trailing both the S&P 500 (up 7.0%) and the Nasdaq Composite (up 11.2%).

Monday was new Goldman CEO David Solomon’s first day on the job. In January he will also assume former CEO Lloyd Blankfein’s role as board chair when Blankfein officially retires.

It didn’t take long for Solomon to be welcomed by Vermont’s U.S. Senator Bernie Sanders with a plan to break up the big U.S. banks. Sanders has introduced legislation that requires the breakup of any financial services firm with total exposure greater than 3% of U.S. GDP.

Goldman and five other banks — JPMorgan, Bank of America, Citigroup, Wells Fargo and Morgan Stanley — meet that criteria, as do four nonbanks — Berkshire Hathaway, Prudential Financial, MetLife and AIG.

On Thursday, the bank said in a note to investors that S&P 500 companies will spend some $3 trillion in cash next year, an increase of 13%. Nearly half of that spending (49%) will be cash returned to shareholders in the form of dividends and buybacks. Goldman estimated that $525 billion of that spending will fund dividend payments (up 6% year over year) and $940 billion will fund share buybacks (up 22% from 2018).

The bank’s stock closed at $225.71 on Friday, down about 0.8% for the day, in a 52-week range of $218.89 to $275.31. The 12-month consensus price target on the stock is $275.14, and the forward price-to-earnings ratio is 8.91.

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