US set for record run of profits
US set for record run of profits
By Francesco Guerrera andDavid Wighton in New York
Copyright The Financial Times Limited 2006
Published: July 5 2006 03:00 | Last updated: July 5 2006 03:00
US companies are expected to report a strong performance in the second quarter of the year, remaining on track to achieve the longest ever stretch of double-digit profit growth, according to Wall Street analysts.
Earnings reports for the three months to June, which begin in earnest next week with the aluminium group Alcoa, are set to confirm that corporate America is in good health, in spite of uncertainties over the economy and a volatile stock market. Analysts forecast that total earnings for the S&P 500 index of large companies will be more than12 per cent higher than the second quarter of 2005, helped by strong balance sheets, stable margins and lower labour costs.
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However, Mike Thompson, director of research at Thomson Financial, which collates analysts' forecasts, said that several companies were likely to beat Wall Street's predictions, leading to overall profit growth of about 13-14 per cent.
This would be the 12th consecutive quarter that profits at US companies have grown by at least 10 per cent - a three-year streak that has only occurred once before, during the 1990s.
"American companies are experiencing really good earnings growth and there are no signs of a profit recession in the near term, " said Kari Pinkernell, senior strategist at Merrill Lynch.
Analysts expect double-digit profit growth to continue for the remainder of the year and into 2007. US companies need to maintain their record of 10 per cent profit growth through the end of the year to experience the longest expansion in earnings since records began in 1950.
Tobias Levkovich, US equity strategist at Citigroup, said stock market investors had largely been expecting a good second-quarter performance but were awaiting companies' predictions for the second half of the year.
US shares have been see-sawing in the latter part of the quarter, although they were boosted last week when the Federal Re-serve stopped short of issuing a commitment to raise interest rates in August. The stock market falls were particularly mark-ed in the information technology sector. Although IT companies are expected to have recorded solid profit growth of 10 per cent during the quarter, the tech-heavy Nasdaq Composite Index lost more than 7 per cent during the past three months.
John McDonald, analyst at Banc of America Securities, expects US banks to report average earnings per share growth of 7 per cent, down from 9 per cent in the first quarter, helped by tight expense control and continued share buybacks.
By Francesco Guerrera andDavid Wighton in New York
Copyright The Financial Times Limited 2006
Published: July 5 2006 03:00 | Last updated: July 5 2006 03:00
US companies are expected to report a strong performance in the second quarter of the year, remaining on track to achieve the longest ever stretch of double-digit profit growth, according to Wall Street analysts.
Earnings reports for the three months to June, which begin in earnest next week with the aluminium group Alcoa, are set to confirm that corporate America is in good health, in spite of uncertainties over the economy and a volatile stock market. Analysts forecast that total earnings for the S&P 500 index of large companies will be more than12 per cent higher than the second quarter of 2005, helped by strong balance sheets, stable margins and lower labour costs.
ADVERTISEMENT
However, Mike Thompson, director of research at Thomson Financial, which collates analysts' forecasts, said that several companies were likely to beat Wall Street's predictions, leading to overall profit growth of about 13-14 per cent.
This would be the 12th consecutive quarter that profits at US companies have grown by at least 10 per cent - a three-year streak that has only occurred once before, during the 1990s.
"American companies are experiencing really good earnings growth and there are no signs of a profit recession in the near term, " said Kari Pinkernell, senior strategist at Merrill Lynch.
Analysts expect double-digit profit growth to continue for the remainder of the year and into 2007. US companies need to maintain their record of 10 per cent profit growth through the end of the year to experience the longest expansion in earnings since records began in 1950.
Tobias Levkovich, US equity strategist at Citigroup, said stock market investors had largely been expecting a good second-quarter performance but were awaiting companies' predictions for the second half of the year.
US shares have been see-sawing in the latter part of the quarter, although they were boosted last week when the Federal Re-serve stopped short of issuing a commitment to raise interest rates in August. The stock market falls were particularly mark-ed in the information technology sector. Although IT companies are expected to have recorded solid profit growth of 10 per cent during the quarter, the tech-heavy Nasdaq Composite Index lost more than 7 per cent during the past three months.
John McDonald, analyst at Banc of America Securities, expects US banks to report average earnings per share growth of 7 per cent, down from 9 per cent in the first quarter, helped by tight expense control and continued share buybacks.
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