Just like Charlie Sheen, Goldman Sachs (NYSE:GS) is winning.

OK, not just like Charlie Sheen, or at least, not in the same ways as Charlie Sheen. But make no mistake about it, Goldman is winning. 

This morning, Goldman reported fourth-quarter earnings per share of $5.60, which was well above the average analyst estimate of $3.78. That's great, but what investors should really be excited about is the fact that on an annualized basis, Goldman's return on equity was 16.5% for the fourth quarter. That compares to just 8.6% for the previous quarter and 5.8% a year ago.

Employee compensation swings around quarter to quarter at Goldman, and it was low this quarter, so that helped. We also don't want to get too carried away looking at one quarter. But still, if investors hope to see Goldman's stock garner higher valuation multiples, higher equity returns are what they want to see.

Some of credit for the great quarter goes to the typical swing of the markets that Goldman serves. Investment banking activity was up industrywide -- fee leaders JPMorgan Chase and Bank of America both saw IB fees rise in the fourth quarter as well. Of course, it's notable that Goldman's fees rose more, and that was without much of a gain in its industry-leading M&A practice. Fourth-quarter trading activity also improved, particularly in fixed-income products.

There's also some gains in there that aren't repeatable. For instance, Goldman sold off its hedge fund administration business and recorded a $500 million gain on the sale. 

But there was also plenty that we can credit Goldman for directly. Notably, overall costs were up a mere 3% from last year despite the monster 53% jump in revenue. Goldman CEO Lloyd Blankfein has made it clear that he knows there's a limit to cutting costs, but the belt-tightening that has gone on is clearly showing up on the bottom line. 

There's good reason for investors to be bidding up Goldman's shares today. There's more ground the bank still needs to cover, but it's clearly been able to capitalize on favorable market conditions even as it's keeping tight control over expenses.

Fool contributor Matt Koppenheffer owns shares of Bank of America. The Motley Fool recommends Goldman Sachs. The Motley Fool owns shares of Bank of America and JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.