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Goldman Sachs or Berkshire Hathaway: Which Stock is the Better Buy for 2023?
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After a volatile 2022, seeking the “crème of the crop” stocks to invest in may be beneficial as slower growth in the broader economy is still anticipated this year.
Berkshire Hathaway (BRK.B - Free Report) and Goldman Sachs (GS - Free Report) are two firms that have continued to stick out year after year in terms of growth and have long boasted strong management teams and an eye for the future.
Let’s see if these two giants look geared to have strong performances in 2023.
Overview
With business operations dating back to 1889, Berkshire Hathaway gained notoriety after famed investor and CEO Warren Buffett acquired the company in 1965. Following Buffett’s ownership, Berkshire has operated as a holding company, with the famous investor buying troubled businesses and bringing them back to prosperity.
Image Source: Zacks Investment Research
Examples of such brands include GEICO, Duracell, and Fruit of The Loom, among others. Outside of these renowned transformations, Berkshire’s main businesses revolve around insurance, freight rail transportation, utility, and energy generation and distribution.
In its own right, Goldman Sachs has a long history that dates back to 1869 when Marcus Goldman and his son and son-in-law Samuel Sachs became renowned for their “commercial paper business.” Mr. Sachs purchased promissory notes from local merchants during a period of tight and expensive bank credit and sold them to New York’s commercial banks.
Today, Goldman Sachs has continued its financial prowess evolving into a financial conglomerate and investment banking giant that operates on a global scale. Goldman Sachs is now a leading provider of international banking, securities, investment management, and consumer banking services.
Performance & Valuation
Over the last year, Berkshire Hathaway is up +1% to outperform Goldman Sachs -13% and the S&P 500’s -20% decline. Gazing at the last decade, Berkshire Hathaway’s is now up +233% to top Goldman Sachs and the benchmark.
Image Source: Zacks Investment Research
Trading around $314 per share BRK.B trades at 20.8X forward earnings. In comparison, GS stock trades at $347 per share and just 10.3X forward earnings.
Image Source: Zacks Investment Research
Goldman Sachs certainly appears attractive from a valuation standpoint, trading 40% below its decade high of 17.1X and on par with the median of 10.4X. Similarly, Berkshire trades 31% beneath its decade-long high of 30.4X and also near its median of 20.4X.
Goldman Sachs does stick out in terms of a broader market perspective as well, trading below the benchmark’s 17.2X with Berkshire Hathaway just above these levels.
Growth & Outlook
Pivoting to growth, Berkshire’s earnings are now projected to pop 22% for 2022 and jump another 12% in fiscal 2023 at $16.62 per share. Even better, earnings estimate revisions have largely gone up over the last 30 days.
Image Source: Zacks Investment Research
On the top line, sales are forecasted to be up 8% for 2022 and rise another 2% in FY23 at $305.90 billion. Fiscal 2023 would represent 20% growth from pre-pandemic levels with 2019 sales at $254.61 billion. This is impressive growth considering the size and age of a company like Berkshire Hathaway.
Turning to Goldman Sachs, earnings are expected to decline -44% for 2022 at $33.46 per share. This is following a very tough-to-compete-with year and exceptional earnings of $59.45 a share in 2021. Fiscal 2023 earnings are expected to stabilize and rise 13% to $37.87 per share. Earnings estimates have slightly declined over the last 90 days.
Sales are forecasted to dip -20% for 2022 and rise 8% in FY23 to $51.32 billion. Fiscal 2023 would be an impressive 40% increase from pre-pandemic levels with 2019 sales at $36.54 billion.
Image Source: Zacks Investment Research
Bottom Line
At the moment, Berkshire Hathaway (BRK.B - Free Report) stock looks like the more attractive option to start 2023 with its earnings estimate revisions trending much higher for FY22 and FY23. This lands BRK.B stock a Zacks Rank #1 (Strong Buy).
Goldman Sachs (GS - Free Report) , on the other hand, continues to churn out strong bottom-line results, along with its attractive valuation. But earnings estimates have trended down landing the stock a Zacks Rank #3 (Hold).
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Goldman Sachs or Berkshire Hathaway: Which Stock is the Better Buy for 2023?
After a volatile 2022, seeking the “crème of the crop” stocks to invest in may be beneficial as slower growth in the broader economy is still anticipated this year.
Berkshire Hathaway (BRK.B - Free Report) and Goldman Sachs (GS - Free Report) are two firms that have continued to stick out year after year in terms of growth and have long boasted strong management teams and an eye for the future.
Let’s see if these two giants look geared to have strong performances in 2023.
Overview
With business operations dating back to 1889, Berkshire Hathaway gained notoriety after famed investor and CEO Warren Buffett acquired the company in 1965. Following Buffett’s ownership, Berkshire has operated as a holding company, with the famous investor buying troubled businesses and bringing them back to prosperity.
Image Source: Zacks Investment Research
Examples of such brands include GEICO, Duracell, and Fruit of The Loom, among others. Outside of these renowned transformations, Berkshire’s main businesses revolve around insurance, freight rail transportation, utility, and energy generation and distribution.
In its own right, Goldman Sachs has a long history that dates back to 1869 when Marcus Goldman and his son and son-in-law Samuel Sachs became renowned for their “commercial paper business.” Mr. Sachs purchased promissory notes from local merchants during a period of tight and expensive bank credit and sold them to New York’s commercial banks.
Today, Goldman Sachs has continued its financial prowess evolving into a financial conglomerate and investment banking giant that operates on a global scale. Goldman Sachs is now a leading provider of international banking, securities, investment management, and consumer banking services.
Performance & Valuation
Over the last year, Berkshire Hathaway is up +1% to outperform Goldman Sachs -13% and the S&P 500’s -20% decline. Gazing at the last decade, Berkshire Hathaway’s is now up +233% to top Goldman Sachs and the benchmark.
Image Source: Zacks Investment Research
Trading around $314 per share BRK.B trades at 20.8X forward earnings. In comparison, GS stock trades at $347 per share and just 10.3X forward earnings.
Image Source: Zacks Investment Research
Goldman Sachs certainly appears attractive from a valuation standpoint, trading 40% below its decade high of 17.1X and on par with the median of 10.4X. Similarly, Berkshire trades 31% beneath its decade-long high of 30.4X and also near its median of 20.4X.
Goldman Sachs does stick out in terms of a broader market perspective as well, trading below the benchmark’s 17.2X with Berkshire Hathaway just above these levels.
Growth & Outlook
Pivoting to growth, Berkshire’s earnings are now projected to pop 22% for 2022 and jump another 12% in fiscal 2023 at $16.62 per share. Even better, earnings estimate revisions have largely gone up over the last 30 days.
Image Source: Zacks Investment Research
On the top line, sales are forecasted to be up 8% for 2022 and rise another 2% in FY23 at $305.90 billion. Fiscal 2023 would represent 20% growth from pre-pandemic levels with 2019 sales at $254.61 billion. This is impressive growth considering the size and age of a company like Berkshire Hathaway.
Turning to Goldman Sachs, earnings are expected to decline -44% for 2022 at $33.46 per share. This is following a very tough-to-compete-with year and exceptional earnings of $59.45 a share in 2021. Fiscal 2023 earnings are expected to stabilize and rise 13% to $37.87 per share. Earnings estimates have slightly declined over the last 90 days.
Sales are forecasted to dip -20% for 2022 and rise 8% in FY23 to $51.32 billion. Fiscal 2023 would be an impressive 40% increase from pre-pandemic levels with 2019 sales at $36.54 billion.
Image Source: Zacks Investment Research
Bottom Line
At the moment, Berkshire Hathaway (BRK.B - Free Report) stock looks like the more attractive option to start 2023 with its earnings estimate revisions trending much higher for FY22 and FY23. This lands BRK.B stock a Zacks Rank #1 (Strong Buy).
Goldman Sachs (GS - Free Report) , on the other hand, continues to churn out strong bottom-line results, along with its attractive valuation. But earnings estimates have trended down landing the stock a Zacks Rank #3 (Hold).