Is Standard and Poors finally getting it?

I was just looking up the latest earnings estimates for the S&P 500 on the Standard and Poors website, (link will open an Excel spreadsheet) and I noticed a dramatic change from a week ago.

In the “Operating earnings per share” section near the top, where Standard and Poors normally lists the estimated earnings for the S&P 500, there’s this note: “This series is under review should be posted soon.

Are they finally going to lower the insane estimate of $81 for the 2009 earnings?  I’m guessing so.  There are also a few interesting notes at the very top of the spreadsheet.  Here’s a sample:

With 25.36% of the market value and 93 issues reported, actuals compute to a negative $-1.16 for operating (est $+3.02); -$3.18 for As Reported

Translation – with over 25% of the S&P 500 having reported 4th quarter earnings, the total earnings reported so far are negative $3.18!  Go ahead, try computing a price earnings ratio with negative earnings.  Unless you know something about math that no one else does, you’ll get a negative P/E ratio.  I’ve never heard of that with the S&P 500 before.  (The DOW 30 had a negative PE ratio for awhile last year though.)

Operating set for the 6th quarter of negative growth, a new record (5 in Q4,’00-Q4, and Q4, 90-Q4,’91) (I think that speaks for itself.)

Financials set for their 5th consecutive quarter of negative EPS, also a record; 5 Qs -$97B vs. prior 5Qs $+263B, $-360B turnaround.

Translation – financial institutions have now had a record 5 straight quarters of cumulative losses.  During the last 5 quarters, financial institutions cumulative earnings are negative $97 billion.  That’s $360 billion less than the 5 previous quarters combined.

Operating EPS coming in 8% lower than top-down estimate, Staples coming in slightly better than expected, continued large Financial loss.

Translation – we were wrong!  These companies suck!  Despite our estimates, they really aren’t making any money!  We’re idiots!  (Just kidding!)

I’m sticking to my 2009 estimate of earnings for the S&P 500 to be in the $40 to $50 range.  We’ll see how long it takes Standard and Poors to post new estimates that are more in line with reality.  And mark my words – the stock market will drop when they do release new estimates, because everyone will be walking around saying “How could we have been so freaking far off?”  While others simply say “duh!”



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  1. [...] an update to a story I wrote this past weekend.  It looks like Standard and Poors has updated some of their earnings estimates, but they also [...]

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