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Buy GS and C on Solid Q3 Earnings, Attractive Valuation and Upside
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Key Takeaways
GS benefits from stronger deal activity, equity trading, wealth assets and alternative fundraising.
C's improving net interest income, streamlined operations and private-market expansion support growth.
GS and C trade below industry valuation multiples, with average price targets implying 21.6% and 23.4% upside.
The third-quarter 2026 earnings season is in full swing now. Most of the major investment banks have reported their quarterly financial numbers. Here, we recommend two giant investment banks to buy for various reasons.
These are: The Goldman Sachs Group Inc. (GS - Free Report) and Citigroup Inc. (C - Free Report) . Both investment banks have reported solid third-quarter 2026 earnings results. Year to date, these stocks have significantly lagged the benchmark S&P 500 Index.
As a result, both stocks are currently available at attractive valuations along with impressive price upside potential in the short-term. Finally, each of our picks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our two picks year to date.
Image Source: Zacks Investment Research
The Goldman Sachs Group Inc.
Goldman Sachs benefited from strong revenue growth in the Global Banking & Markets and Asset & Wealth Management businesses. Improving deal activity and robust equity trading of GS should support fee-income growth.
Growing wealth assets, alternative fundraising and targeted acquisitions should expand GS’ recurring revenues. Its strong capital and liquidity position should support long-term growth and shareholder return. GS has a current dividend yield of 2.28%.
Strong Estimate Revisions
Goldman Sachs has an expected revenue and earnings growth rate of 28% and 10.9%, respectively, for fourth-quarter 2026. The Zacks Consensus Estimate for the current quarter’s earnings has improved 0.8% in the past seven days.
GS has an expected revenue and earnings growth rate of 1% and 4.3%, respectively, for the next year. The Zacks Consensus Estimate for the next year’s earnings has improved 0.5% in the past seven days.
Image Source: Zacks Investment Research
Attractive Valuations
The stock has a forward P/E of 12.35X compared with the industry’s P/E of 12.80X and the S&P 500’s P/E of 18.63X. It has a P/S of 1.81X compared with the industry’s P/S of 1.88X and the S&P 500’s P/S of 3.10X. GS has a P/B of 2.04X compared with the industry’s P/B of 2.46X and the S&P 500’s P/B of 3.64X.
Impressive Price Upside
The short-term average price target of brokerage firms represents an increase of 21.6% from the last closing price of $875.68. The brokerage target price is currently in the range of $875-$1,280. This indicates a maximum upside of 46.2% and no downside.
Image Source: Zacks Investment Research
Citigroup Inc.
Citigroup benefited from higher net interest income (NII). Despite the Fed rate hike, improving loan demand is likely to aid NII in the future. C’s simplified operating structure is improving efficiency and directing capital toward higher-return businesses, while expanding Citi Token Services in Japan and the UAE to support transaction banking growth.
Expanding private-market capabilities may boost C’s fee income, while strong liquidity and improving efficiency support capital returns. Citigroup is broadening its private-credit and private-market capabilities through partnerships and product innovation. C has a current dividend yield of 2.22%.
Strong Estimate Revisions
Citigroup has an expected revenue and earnings growth rate of 15.9% and 32%, respectively, for fourth-quarter 2026. The Zacks Consensus Estimate for the current quarter’s earnings has improved 0.3% in the past seven days.
C has an expected revenue and earnings growth rate of 4.8% and 14.5%, respectively, for the next year. The Zacks Consensus Estimate for the next year’s earnings has improved 0.1% in the past seven days.
Image Source: Zacks Investment Research
Attractive Valuations
The stock has a forward P/E of 10.55X compared with the industry’s P/E of 12.80X and the S&P 500’s P/E of 18.63X. It has a P/S of 1.17X compared with the industry’s P/S of 1.88X and the S&P 500’s P/S of 3.10X. C has a P/B of 1.06X compared with the industry’s P/B of 2.46X and the S&P 500’s P/B of 3.64X.
Impressive Price Upside
The short-term average price target of brokerage firms represents an increase of 23.4% from the last closing price of $120.62. The brokerage target price is currently in the range of $110-$170. This indicates a maximum upside of 40.9% and no downside.
View the Zacks #1 Rank List
Image: Bigstock
Buy GS and C on Solid Q3 Earnings, Attractive Valuation and Upside
Key Takeaways
The third-quarter 2026 earnings season is in full swing now. Most of the major investment banks have reported their quarterly financial numbers. Here, we recommend two giant investment banks to buy for various reasons.
These are: The Goldman Sachs Group Inc. (GS - Free Report) and Citigroup Inc. (C - Free Report) . Both investment banks have reported solid third-quarter 2026 earnings results. Year to date, these stocks have significantly lagged the benchmark S&P 500 Index.
As a result, both stocks are currently available at attractive valuations along with impressive price upside potential in the short-term. Finally, each of our picks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our two picks year to date.
Image Source: Zacks Investment Research
The Goldman Sachs Group Inc.
Goldman Sachs benefited from strong revenue growth in the Global Banking & Markets and Asset & Wealth Management businesses. Improving deal activity and robust equity trading of GS should support fee-income growth.
Growing wealth assets, alternative fundraising and targeted acquisitions should expand GS’ recurring revenues. Its strong capital and liquidity position should support long-term growth and shareholder return. GS has a current dividend yield of 2.28%.
Strong Estimate Revisions
Goldman Sachs has an expected revenue and earnings growth rate of 28% and 10.9%, respectively, for fourth-quarter 2026. The Zacks Consensus Estimate for the current quarter’s earnings has improved 0.8% in the past seven days.
GS has an expected revenue and earnings growth rate of 1% and 4.3%, respectively, for the next year. The Zacks Consensus Estimate for the next year’s earnings has improved 0.5% in the past seven days.
Image Source: Zacks Investment Research
Attractive Valuations
The stock has a forward P/E of 12.35X compared with the industry’s P/E of 12.80X and the S&P 500’s P/E of 18.63X. It has a P/S of 1.81X compared with the industry’s P/S of 1.88X and the S&P 500’s P/S of 3.10X. GS has a P/B of 2.04X compared with the industry’s P/B of 2.46X and the S&P 500’s P/B of 3.64X.
Impressive Price Upside
The short-term average price target of brokerage firms represents an increase of 21.6% from the last closing price of $875.68. The brokerage target price is currently in the range of $875-$1,280. This indicates a maximum upside of 46.2% and no downside.
Image Source: Zacks Investment Research
Citigroup Inc.
Citigroup benefited from higher net interest income (NII). Despite the Fed rate hike, improving loan demand is likely to aid NII in the future. C’s simplified operating structure is improving efficiency and directing capital toward higher-return businesses, while expanding Citi Token Services in Japan and the UAE to support transaction banking growth.
Expanding private-market capabilities may boost C’s fee income, while strong liquidity and improving efficiency support capital returns. Citigroup is broadening its private-credit and private-market capabilities through partnerships and product innovation. C has a current dividend yield of 2.22%.
Strong Estimate Revisions
Citigroup has an expected revenue and earnings growth rate of 15.9% and 32%, respectively, for fourth-quarter 2026. The Zacks Consensus Estimate for the current quarter’s earnings has improved 0.3% in the past seven days.
C has an expected revenue and earnings growth rate of 4.8% and 14.5%, respectively, for the next year. The Zacks Consensus Estimate for the next year’s earnings has improved 0.1% in the past seven days.
Image Source: Zacks Investment Research
Attractive Valuations
The stock has a forward P/E of 10.55X compared with the industry’s P/E of 12.80X and the S&P 500’s P/E of 18.63X. It has a P/S of 1.17X compared with the industry’s P/S of 1.88X and the S&P 500’s P/S of 3.10X. C has a P/B of 1.06X compared with the industry’s P/B of 2.46X and the S&P 500’s P/B of 3.64X.
Impressive Price Upside
The short-term average price target of brokerage firms represents an increase of 23.4% from the last closing price of $120.62. The brokerage target price is currently in the range of $110-$170. This indicates a maximum upside of 40.9% and no downside.
Image Source: Zacks Investment Research