Due to the losses on mortgages, Merrill Lynch (NYSE: MER) is expected to take a big hit to earnings this quarter when it reports on Thursday. Analysts estimate the company may lose $4.57 per share, and the stock could face some more rough weather before it gets through all the financial subprime loan turbulence on its books.

Looking back at past earnings, the stock is not headed in a good direction right now. The stock beat estimates for 11 quarters in a row, but that record turned around last quarter when it reported a 45 cent loss and dropped 9% on the earnings release. With Merrill Lynch looking at a $4.57 earnings hit this quarter, things could get worse before they get better.

The stock has significantly lost about 45% of its value since last January when it hit a 52-week high of $98.68. The stock is now trading at $55.80, but is not alone in its decline as the other big brokerage houses like Morgan Stanley (NYSE: MS), Lehman Brothers (NYSE: LEH) and Bear Stearns (NYSE BSC) are all off their highs as well.
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Kevin Kersten is an Options Analyst with InvestorsObserver.com. Disclosure note: Mr. Kersten owns and or controls a diversified portfolio of long and short positions that may include holdings in companies he writes about. Mr. Kersten does not currently have a position in MER stock.