[Click eStock] "GS, Possible to Escape Undervaluation if Shareholder Return Policy Expands"

On the 2nd, KB Securities forecasted that GS could potentially escape its persistent undervaluation if it expands its shareholder return policy. The investment opinion 'Buy' and the target price of 58,000 won were maintained.

GS's operating profit for the first quarter is expected to record 1 trillion won, a 5% decrease compared to the same period last year, meeting market expectations. Wooje Jeon, a researcher at KB Securities, analyzed, "The average quarterly oil price rose by 1% year-on-year to $81 per barrel, but due to the decline in gas prices, the wholesale electricity price (SMP) adjusted down by 45% during the same period to 131 won per kilowatt-hour. GS Energy is estimated to increase profits by 3% to 695.2 billion won, while the power generation sector including GS EPS and E&R is expected to decrease profits by 21% to 201.7 billion won."

He added, "Currently, the stock price is undervalued with a 12-month implied price-to-earnings ratio (PER) of 4.4 times, a price-to-book ratio (PBR) of 0.37 times, and a dividend yield of 5.6%. However, without additional fluctuations in crude oil and gas prices, the estimated earnings per share (EPS) growth rate from last year through 2026 is -2.1%, limiting the upside potential of the stock price."

Meanwhile, some view GS as a candidate for value-up within the sector due to its low stock price despite stable profit strength. Accordingly, researcher Jeon predicted, "If the shareholder return policy is expanded this year, GS might be able to escape its perennial undervaluation."

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