One of the world's premier investment banks just had one of its premier quarters, and it's trading below tangible book value. That should tell you all you need to know when considering whether or not to buy Goldman Sachs (NYSE: GS). The bank has all the right ingredients to thrive during the rest of the coronavirus pandemic, and is positioning itself well for the future. Let's take a look.

A great quarter during a hard time

The coronavirus pandemic has battered the banking industry this year, but investment banks have been able to find success in their underwriting and trading businesses. Goldman Sachs reported a profit of nearly $3.5 billion in the third quarter, up nearly double from the third quarter of 2019. The quarter was driven by strong year-over-year gains in its trading business, which includes its fixed-income and equities products, as well as in its asset management division. Overall, all four of Goldman's business divisions were up year over year, with the investment bank benefiting from several high-profile initial public offerings, and Goldman's consumer business making gains in wealth management and credit card lending.

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Because Goldman is primarily an investment bank, its consumer banking operations are relatively small compared to other large banks like JPMorgan Chase. So the bank is not as worried as others about heavy loan losses right now. Its total allowance for loan losses was $4.33 billion at the end of the third quarter. Compare that to JPMorgan, which had an allowance of more than $30 billion. The two are certainly very different companies, but this gives you an idea of the total risk Goldman is facing right now, compared to other large banks with huge loan portfolios.

Diversifying for the future

Although Goldman is mainly seen as an investment bank, with roughly 60% of its revenue coming from its trading and investment banking operations, it has been working to further diversify its revenue mix. The goal is to produce consistently strong earnings, even when investment banking and trading activity are not as robust.

Goldman has been doing this by building out its asset management and consumer and wealth management divisions, which includes its digital consumer bank, Marcus. And the efforts really seem to be making progress this year. Asset management revenue jumped 71% in the third quarter, compared to the third quarter of 2019, and is up 32% from the second quarter of this year. Furthermore, the consumer and wealth management division saw quarterly revenue jump 13% year over year and 10% from the linked quarter.

Specifically, while Marcus still only makes up a small slice of Goldman's business, its quarterly revenue is up 50% from the third quarter of 2019. Perhaps even more importantly, every single new product the consumer bank rolls out seems to do well. Marcus has gathered $96 billion in deposits, and it launched the Apple Card, an initiative that Goldman called "the most successful credit card launch ever." At the end of the third quarter, the company said it had $3 billion in total loan balances from the Apple Card.

The bank is planning to roll out many more consumer banking products as well, and recently partnered with Walmart to offer marketplace sellers lines of credit ranging from $10,000 to $75,000. "We want to manage people's financial life," Goldman Sachs' Chief Strategy Officer Stephanie Cohen said recently, adding that Goldman wants Marcus to eventually be a full-service bank.

A higher valuation

At Wednesday morning's prices, Goldman was trading at about 93% tangible book value, with a trailing price-to-earnings multiple of about 11.5 times. Yet it just had one of its top quarters ever, and is working to diversify revenue for the future. This should make Goldman's earnings more stable and fetch the company a higher valuation from investors and analysts down the line. I definitely think the bank is undervalued right now, and is therefore a buy.

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