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Goldman Sachs Group Inc  (NYSE:GS) Owner Earnings per Share (TTM): -30.01 (As of Sep. 2017)

In 1986 Berkshire Hathaway Shareholder Letter, Warren Buffett defined owner earnings as follows:

"These represent (a) reported earnings plus (b) depreciation, depletion, amortization, and certain other non-cash charges...less (c) the average annual amount of capitalized expenditures for plant and equipment, etc. that the business requires to fully maintain its long-term competitive position and its unit volume (If the business requires additional working capital to maintain its competitive position and unit volume, the increment also should be included in (c))...Our owner-earnings equation does not yield the deceptively precise figures provided by GAAP, since (c) must be a guess - and one sometimes very difficult to make. Despite this problem, we consider the owner earnings figure, not the GAAP figure, to be the relevant item for valuation purposes - both for investors in buying stocks and for managers in buying entire businesses...All of this points up the absurdity of the 'cash flow' numbers that are often set forth in Wall Street reports. These numbers routinely include (a) plus (b) - but do not subtract (c)."

Goldman Sachs Group Inc's owner earnings per share for the trailing twelve months (TTM) ended in Sep. 2017 was $-30.01. It's Price-to-Owner-Earnings ratio for today is 0.



During the past 13 years, the highest Price-to-Owner-Earnings ratio of Goldman Sachs Group Inc was 111.68. The lowest was 0.00. And the median was 10.73.



Goldman Sachs Group Inc's Earnings per Share (Diluted) for the three months ended in Sep. 2017 was $5.02. Its Earnings per Share (Diluted) for the trailing twelve months (TTM) ended in Sep. 2017 was $19.17. It's PE Ratio ratio for today is 12.42.

Goldman Sachs Group Inc's EPS without NRI for the three months ended in Sep. 2017 was $5.02. Its EPS without NRI for the trailing twelve months (TTM) ended in Sep. 2017 was $19.17. It's PE Ratio without NRI ratio for today is 12.42.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Goldman Sachs Group Inc Annual Data

Nov07 Nov08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16
Owner Earnings per Share (TTM) Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 22.05 3.33 -23.96 9.37 4.08

Goldman Sachs Group Inc Quarterly Data

Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17
Owner Earnings per Share (TTM) Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 16.46 4.08 2.88 -46.92 -30.01

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Calculation

In 1986 Berkshire Hathaway Shareholder Letter, Warren Buffett defined owner earnings as follows:

"These represent (a) reported earnings plus (b) depreciation, depletion, amortization, and certain other non-cash charges...less (c) the average annual amount of capitalized expenditures for plant and equipment, etc. that the business requires to fully maintain its long-term competitive position and its unit volume. (If the business requires additional working capital to maintain its competitive position and unit volume, the increment also should be included in (c))...Our owner-earnings equation does not yield the deceptively precise figures provided by GAAP, since (c) must be a guess - and one sometimes very difficult to make. Despite this problem, we consider the owner earnings figure, not the GAAP figure, to be the relevant item for valuation purposes - both for investors in buying stocks and for managers in buying entire businesses...All of this points up the absurdity of the 'cash flow' numbers that are often set forth in Wall Street reports. These numbers routinely include (a) plus (b) - but do not subtract (c)."

To make it simple, then you will have:

Owner Earning Per Share = (Net Income + Depreciation, Depletion and Amortization + Change In Deferred Tax - 5Y Average of Maintenance Capital Expenditure + Change In Working Capital) / Shares Outstanding (Diluted Average)

Goldman Sachs Group Inc's "Owner Earnings Per Share (TTM)" Calculation:

TTM / Last Quarter Average of Last 20 Quarters
Net Income }
Depreciation, Depletion and Amortization }
Change In Deferred Tax }
5Y Average of Maintenance Capital Expenditure }
Change In Working Capital }
Shares Outstanding (Diluted Average) }

1. Start with "Net Income" from income statement. Goldman Sachs Group Inc's Net Income for the trailing twelve months (TTM) ended in Sep. 2017 was $8,561 Mil.

2. "Depreciation, Depletion and Amortization" is from cashflow statement. Goldman Sachs Group Inc's Depreciation, Depletion and Amortization for the trailing twelve months (TTM) ended in Sep. 2017 was $1,069 Mil. This needs to be added back because company does not actually need to pay cash for it. It is a non-cash item.

3. Other non-cash charges usually include "Stock Based Compensation" and "Change In Deferred Tax":
However, to be conservative, GuruFocus will not add Stock Based Compensation back to net income. Goldman Sachs Group Inc's Change In Deferred Tax for the trailing twelve months (TTM) ended in Sep. 2017 was $0 Mil.

4. Average maintenance capital expenditure over a business/industry cycle: 5-Year Average Maintenance Capital Expenditure = $1,436 Mil

It is usually best to take a long-term average of maintenance capital expenditure. Ideally this would be as long as 10 years and include at least one economic downturn. However, since many companies do not have as long as 10-year history, here GuruFocus uses the latest 5 years data to do the calculation. To smooth out unusual years but reflect recent developments, we take an average of the 5 year maintenance capital expenditure.

The following shows how to get maintenance capital expenditure.

First, calculate the revenue change regarding to the previous year. If the revenue decreased from the previous year, then the Maintenance Capital Expenditure = Capital Expenditure (positive).
Second, if the revenue increased from the previous year, then calculate the percentage of Net PPE as of corresponding Revenue.
Growth Capital Expenditure = Percentage of Property, Plant and Equipment as of corresponding Revenue * Revenue Increase
Third, calculate Capital Expenditure (positive) - Growth Capital Expenditure.
If [Capital Expenditure (positive) - Growth Capital Expenditure] was negative, then the Maintenance Capital Expenditure = Capital Expenditure (positive).
If [Capital Expenditure (positive) - Growth Capital Expenditure] was positive, then the Maintenance Capital Expenditure = Capital Expenditure (positive) - Growth Capital Expenditure.
Fourth, get the average of the 5 years maintenance capital expenditure.

Goldman Sachs Group Inc's 5-Year Average Maintenance Capital Expenditure = $1,436 Mil

5. "Change In Working Capital" is from cashflow statement. Goldman Sachs Group Inc's Change In Working Capital for the trailing twelve months (TTM) ended in Sep. 2017 was $-20,368 Mil.
Note: GuruFocus' Change in Working Capital is provided by Morningstar. It is calculated by adding the items under "Change in operating assets and liabilities" (may refer to a different name for different company) section in Cash Flow Statement from original financial report. And sometimes it includes non-current parts of assets and liabilities.

6. Goldman Sachs Group Inc's Shares Outstanding (Diluted Average) for the months ended in Sep. 2017 was 405.700 Mil.

Goldman Sachs Group Inc's Onwer Earnings Per Share for Sep. 2017 is calculated as:

Owner Earnings Per Share(TTM)
=( Net Income+Depreciation, Depletion and Amortization+Change In Deferred Tax
=( 8561 +1069+0
-5Y Avg of Maintenance CAPEX+Change In Working Capital )/Shares Outstanding (Diluted Average)
-1436.4073471+-20368)/405.700
=-30.01

Price-to-Owner-Earnings=Current Price/Owner Earnings Per Share (TTM)
=238.13/-30.01
=0

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Be Aware

Assumption: Companies usually do not report maintenance capital expenditures and growth capital expenditures separately. Here we use estimated numbers and average them over 5 years. The method to estimate maintenance capital expenditures can be found in above part 4.

Note: GuruFocus' Change In Working Capital is provided by Morningstar. It is calculated by adding the items under "Change in operating assets and liabilities" (may refer to a different name for different company) section in Cash Flow Statement from original financial report. And it includes non-current parts of assets and liabilities.


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