Goldman Sachs Group (NYSE: GS) and BlackRock (NYSE:BLK) are both large-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, profitability, valuation and risk.

Volatility & Risk

Goldman Sachs Group has a beta of 1.31, suggesting that its stock price is 31% more volatile than the S&P 500. Comparatively, BlackRock has a beta of 1.65, suggesting that its stock price is 65% more volatile than the S&P 500.

Profitability

This table compares Goldman Sachs Group and BlackRock’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Goldman Sachs Group 15.72% 13.07% 1.05%
BlackRock 38.97% 13.29% 1.90%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Goldman Sachs Group and BlackRock, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Goldman Sachs Group 1 10 9 0 2.40
BlackRock 0 2 9 0 2.82

Goldman Sachs Group currently has a consensus price target of $268.67, suggesting a potential upside of 15.96%. BlackRock has a consensus price target of $597.27, suggesting a potential upside of 18.79%. Given BlackRock’s stronger consensus rating and higher probable upside, analysts plainly believe BlackRock is more favorable than Goldman Sachs Group.

Valuation and Earnings

This table compares Goldman Sachs Group and BlackRock’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Goldman Sachs Group $32.07 billion 2.73 $4.29 billion $19.76 11.73
BlackRock $12.49 billion 6.45 $4.97 billion $22.60 22.25

BlackRock has lower revenue, but higher earnings than Goldman Sachs Group. Goldman Sachs Group is trading at a lower price-to-earnings ratio than BlackRock, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

72.5% of Goldman Sachs Group shares are held by institutional investors. Comparatively, 83.6% of BlackRock shares are held by institutional investors. 2.6% of Goldman Sachs Group shares are held by company insiders. Comparatively, 1.9% of BlackRock shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Goldman Sachs Group pays an annual dividend of $3.20 per share and has a dividend yield of 1.4%. BlackRock pays an annual dividend of $11.52 per share and has a dividend yield of 2.3%. Goldman Sachs Group pays out 16.2% of its earnings in the form of a dividend. BlackRock pays out 51.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Goldman Sachs Group has increased its dividend for 6 consecutive years and BlackRock has increased its dividend for 8 consecutive years. BlackRock is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

BlackRock beats Goldman Sachs Group on 13 of the 16 factors compared between the two stocks.

Goldman Sachs Group Company Profile

The Goldman Sachs Group, Inc. operates as an investment banking, securities, and investment management company worldwide. It operates through four segments: Investment Banking, Institutional Client Services, Investing & Lending, and Investment Management. The Investment Banking segment provides financial advisory services, including strategic advisory assignments related to mergers and acquisitions, divestitures, corporate defense activities, restructurings, spin-offs, and risk management; and underwriting services, such as debt and equity underwriting of public offerings and private placements of various securities and other financial instruments, as well as derivative transactions with public and private sector clients. The Institutional Client Services segment is involved in client execution activities related to making markets in cash and derivative instruments for interest rate products, credit products, mortgages, currencies, commodities, and equities; and provision of securities services comprising financing, securities lending, and other prime brokerage services, as well as markets in and clears client transactions on primary stock, options, and futures exchanges. The Investing & Lending segment invests in and originates longer-term loans to provide financing to clients; and makes investments in debt securities and loans, public and private equity securities, and infrastructure and real estate entities, as well as provides unsecured and secured loans to retail clients through its digital platforms. The Investment Management segment offers investment management products and services; and wealth advisory services consisting of portfolio management, financial planning and counseling, and brokerage and other transaction services. The company serves corporations, financial institutions, governments, and individuals. The Goldman Sachs Group, Inc. was founded in 1869 and is headquartered in New York, New York.

BlackRock Company Profile

BlackRock, Inc. is a publicly owned investment manager. The firm primarily provides its services to institutional, intermediary, and individual investors including corporate, public, union, and industry pension plans, insurance companies, third-party mutual funds, endowments, public institutions, governments, foundations, charities, sovereign wealth funds, corporations, official institutions, and banks. It also provides global risk management and advisory services. The firm manages separate client-focused equity, fixed income, and balanced portfolios. It also launches and manages open-end and closed-end mutual funds, offshore funds, unit trusts, and alternative investment vehicles including structured funds. The firm launches equity, fixed income, balanced, and real estate mutual funds. It also launches equity, fixed income, balanced, currency, commodity, and multi-asset exchange traded funds. The firm also launches and manages hedge funds. It invests in the public equity, fixed income, real estate, currency, commodity, and alternative markets across the globe. The firm primarily invests in growth and value stocks of small-cap, mid-cap, SMID-cap, large-cap, and multi-cap companies. It also invests in dividend-paying equity securities. The firm invests in investment grade municipal securities, government securities including securities issued or guaranteed by a government or a government agency or instrumentality, corporate bonds, and asset-backed and mortgage-backed securities. It employs fundamental and quantitative analysis with a focus on bottom-up and top-down approach to make its investments. The firm employs liquidity, asset allocation, balanced, real estate, and alternative strategies to make its investments. In real estate sector, it seeks to invest in Poland and Germany. The firm benchmarks the performance of its portfolios against various S&P, Russell, Barclays, MSCI, Citigroup, and Merrill Lynch indices. BlackRock, Inc. was founded in 1988 and is based in New York City with additional offices in Boston, Massachusetts; London, United Kingdom; Gurgaon, India; Hong Kong; Greenwich, Connecticut; Princeton, New Jersey; Edinburgh, United Kingdom; Sydney, Australia; Taipei, Taiwan; Singapore; Sao Paulo, Brazil; Philadelphia, Pennsylvania; Washington, District of Columbia; Toronto, Canada; Wilmington, Delaware; and San Francisco, California.

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