Goldman Sachs (NYSE:GS) reported its fourth-quarter and year-end 2018 results recently, and to say that the company's performance was strong would be a major understatement. Not only did the company beat expectations on both the top and bottom lines, but the results from some key areas of the business looked wonderful.

Despite a roughly 8% post-earnings rally, Goldman is still trading for less than its book value and at a ridiculously low price-to-earnings multiple. Here's a rundown of the company's fourth-quarter results and why Goldman is still so cheap.

Check out the latest Goldman Sachs earnings call transcript.

Businessmen in a room with many screens displaying financial data.

Image source: Getty Images.

A massive earnings beat

While the headline EPS and revenue numbers certainly don't tell the whole story about any company's earnings, Goldman's fourth-quarter numbers were rather impressive.

On the top line, Goldman Sachs generated revenue of $8.08 billion -- more than a half billion more than the $7.55 billion analysts had been expecting.

The bottom-line earnings number was even more impressive, coming in at $6.04 per share and beating the $4.45 consensus by a wide margin.

Digging a little deeper

More important than the earnings and revenue surprises is how the bank did it. So let's look beyond the headline numbers for a bit. Here are some of the key takeaways that help illustrate how Goldman shattered expectations for the fourth quarter.

Goldman's investment banking business generated $2.04 billion in revenue, about $160 million more than expected. Particularly strong was advisory revenue, which jumped by a staggering 56% from a year ago.

Perhaps most significant from a long-term investor's perspective was the massive positive surprise in "investing and lending" revenue, which came in at $1.91 billion, 36% above the $1.35 billion analysts had been looking for. These results include income from the Marcus consumer banking platform, which appears to be growing faster than analysts had expected. I've written before about Marcus' massive long-term growth potential, and after this quarter's numbers, I'm even more excited about what comes next. The bank has already announced its entry into wealth management for nonwealthy ("Main Street") investors, and future avenues of growth could include checking accounts, mortgages, and more.

Furthermore, Goldman's return on equity (ROE) of 12.1% is well in excess of the industry benchmark of 10%, and the bank bought back stock aggressively during the fourth quarter. In fact, Goldman repurchased 5.6 million shares during the quarter, about 1.5% of the total number outstanding.

The 1MDB scandal is still a big question mark

There is one big issue that remains to be resolved. The 1MDB Malaysian bond fund scandal still has the potential to cost Goldman Sachs billions of dollars.

If you aren't familiar, here's the short version. Bankers from Goldman Sachs helped Malaysia set up a $6.5 billion bond fund, and to put it mildly, it didn't turn out well. At least $4.5 billion was taken from the fund (not by Goldman), and it could cost the bank billions of dollars to put the matter behind it. Malaysia is attempting to recoup billions, and the U.S. Justice Department is investigating the bank's role in the scandal.

CEO David Solomon briefly addressed the issue on the company's conference call, but as is to be expected, he's limited in what he can say about an ongoing investigation. He did, however, apologize to the Malaysian people for the way things turned out.

Check out this rock-bottom valuation

Even after the post-earnings jump, Goldman Sachs is still a cheap bank stock by most metrics. The bank earned $25.27 per share this year, so the stock trades for roughly 7.7 times trailing earnings. And Goldman's book value has increased to $207.36 per share, so the stock still trades for a 6% discount to the value of its assets.

Until there's some closure on the 1MDB scandal, I'd expect the depressed valuation to continue. However, don't let the cheap valuation trick you -- Goldman Sachs just posted a stellar quarter. If you're willing to wait out the legal issues, it could be a good time to buy from a long-term standpoint.