Whitney Cuts Goldman Sachs Earnings Estimate

This took a bit of the edge off the rally led by financials and tech today.

Goldman is a strong bellwether for the US financial markets, since they make most of their earnings by ravaging all participants in them. While the fish can still swim, so the squid can feed. So like it or not, as Goldman goes, so the US equity market probably goes, at least in the short term.

It will take all their resources to keep the winning streak intact.

Barrons
GS: Whitney Cuts Q4, ‘10 Estimate
By Tiernan Ray

Joining the string of Goldman Sachs (GS) estimate cuts, Meredith Whitney Advisory Group today lowered its EPS estimate for Q4 from $6 to $5.50, though that’s still above the $5.42 average estimate.

For this year, Whitney lowered her estimate to $19.20 from $19.65, though that’s above the average $18.78 estimate.Previously: GS: Pali Cuts Estimates on TradingJoining the string of Goldman Sachs (GS) estimate cuts, Meredith Whitney Advisory Group today lowered the EPS estimate for Goldman’s Q4 from $6 to $5.50, though that’s still above the $5.42 average estimate.

For this year, Whitney lowered her estimate to $19.20 from $19.65, though that’s above the average $18.78 estimate.

How Cheap Is the PE Ratio When Earnings Are Negative?

Market Watch
S&P heads to first quarter ever of negative earnings
By Kate Gibson
4:29 p.m. EST Feb. 13, 2009

NEW YORK (MarketWatch) -- As Wall Street tracks Washington's moves to help the beleaguered banking sector and push through a massive economic stimulus, nearly 400 of the S&P's 500 companies have weighed in and reported a collective loss, even excluding the financials.

"This is the worst; after the sixth quarter of negative growth, it will be the first quarter ever of negative earnings," said Howard Silverblatt, senior index analyst, at Standard & Poor's.

A sixth quarter of negative growth ties the prior record set when Harry Truman was president, running from the first quarter of 1951 to the second quarter of 1952.

"Next quarter, we're expecting a new record of seven quarters of negative growth," Silverblatt added.

As of the close of business Thursday, Silverblatt calculates S&P earnings per share, on a reported basis, at a loss of $10.44 for the quarter. If financials were taken out of the equation, that deficit would drop to $2.35 a share.

"The majority of it is financials, but the biggest issue to hit as reported -- the worst charge -- was ConocoPhillips (COP) , which accounted for $3.66," said Silverblatt.

Income from continuing operations at the companies in the S&P 500 that already have reported earnings fell $90.8 billion, with financials contributing $70.4 billion of the decline. Conoco accounted for $31.9 billion of the shortfall, said Silverblatt...

The Dow is now "too heavily weighted in financials to accurately reflect the current business mix of this country," said Marc Pado, U.S. market strategist, Cantor Fitzgerald.

With 84.8% of the market value and 390 issues reported, operating earnings, which includes income from products or services and excludes financing and other costs, are down 62% from the fourth quarter of 2007, Silverblatt said...