SAN FRANCISCO (MarketWatch) — It was bound to happen. After being kicked to the Wall Street curb for the last four years, there’s a new claim that Goldman Sachs Group Inc. is about to enjoy a renaissance.

Media and analysts are swooning over the so-called vampire squid. They argue that most legal risks have been reconciled. The stock is oversold, they say. Goldman GS, -1.14% has emerged stronger from a painful pruning, shedding thousands of jobs.

CEOs Lloyd Blankfein of Goldman Sachs and Jamie Dimon of J.P. Morgan Chase. Reuters

Finally, and most importantly, they say, the bank appears ready to pounce on a sharp rise in trading volume. Goldman shares, according to the Sept. 29 issue of Barron’s, are poised to rally as much as 25%. Read Barron’s bullish report on Goldman Sachs.

I’ll even add a reason of my own: For all of its missteps, Goldman doesn’t seem to have lost its blue-chip client base. The investment bank has advised more mergers and acquisitions than any bank in the world year to date, gleaning $1.13 billion in revenue, according to Dealogic.

This all makes for a compelling narrative. If only it were enough. But it’s not.

Goldman Sachs, like it or not, is no longer the shiniest diamond in a Wall Street brooch full of dull stones. In the post-crisis brokerage industry, firms such as BlackRock Inc. BLK, -0.68% and even J.P. Morgan Chase & Co. JPM, -0.84% have stolen Goldman’s thunder and business.

Goldman, its shares having tumbled more than 50% since 2008, has fallen and can’t get up. It enjoyed a robust 2009, with $13.39 billion in net income. Analysts predicted a better 2010. When profit fell to $8.35 billion, there was hope that 2011 would be brighter, without massive fines and legal entanglements. No such luck. Net income was $4.44 billion for the entire year.

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This year is looking slightly better — Goldman is on pace to earn $6 billion or more — but it’s still a far cry from 2009, when profits were twice as high. Those who believe the stock is about to go on a bull run should consider that Goldman shares are roughly at the same level they were when the investment bank was actually more profitable.

It’s not that Goldman is a poorly run brokerage. It’s just that without the leverage used from 1999 to 2009, it’s an ordinary one. That’s an issue glossed over by the new Goldman bulls. Goldman’s leverage ratio has fallen to 13 from 26 at the end of 2007.

The difference is substantial because Goldman essentially can only make half of the bets it made five years ago in a market with fewer sure winners.

Again, the box Goldman finds itself in isn’t anything special. With its current price at 0.83 times book and a forward price-to-earnings ratio of 9.45 — Goldman trades at roughly the same level as J.P. Morgan — below BlackRock and better than Morgan Stanley MS, -2.35% .

Finally, there’s that little problem that Goldman can’t fully shake its reputation as an American corporate pariah. Goldman may not be losing clients, but it’s not clear how much clients trust the firm, especially after former Goldman employee Greg Smith wrote his tell-all op-ed.

And then there was when the public found out how institutional customers were misled in the Abacus deal. See WSJ column: Greg Smith might just make you feel sorry for Goldman.

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That’s the one where Goldman favored one client, Paulson & Co., over institutions. It also cost Goldman $550 million in a Securities and Exchange Commission settlement. Read more on Goldman’s lost luster.

Being popular with the public may not have a direct link to the bottom line, but there’s a reason people are down on Goldman that investors should take note of.

For the public, fair or not, it’s disgust that the firm took bailout cash at the same time it was betting against mortgage-related securities. It’s about having a former Goldman CEO, Henry Paulson, creating Wall Street bailout programs and then Goldman participating in them. It’s about one embarrassing deal after another. It’s ties to Washington.

And for the investors, “perception” is difficult to read. Is it working against the company? When Goldman makes a misstep, will it explode with a regulatory investigation, settlement and momentum-draining fines? Or will Goldman’s influence help it? Will the bank receive favors from friends?

That uncertainty, which is shared by all of the banks, is why Goldman shares aren’t trading at that 25% premium now, even though it’s likely the firm will have a better year.

Leaner, meaner and adjusting to the new landscape, Goldman is still trying to define itself. And the environment, something it can’t control, has yet to settle.

Could the stock rise 25%? Sure. But it could fall by the same amount, too.