U.S. 2015 profits forecast to grow 1.7
percent; oil, dollar are concerns
Send a link to a friend
[March 13, 2015]
By Caroline Valetkevitch
NEW YORK (Reuters) - Corporate America's
profit engine may be running out of steam. Wall Street analysts,
expecting two quarters of declining earnings, are banking on a
second-half recovery to keep 2015 from becoming the worst year for
profits since the last recession.
|
But with U.S. crude holding below $50 a barrel and the dollar at
12-year highs against the euro, even those bets may be optimistic.
This year's U.S. profit estimates have fallen sharply in recent
months to a mere 1.7 percent growth, Thomson Reuters data shows, as
analysts cut already gloomy forecasts for energy company earnings
and the dollar keeps climbing, hurting U.S. exporters, including
multinationals.
A projected 55 percent decline in energy company earnings is the
single biggest downward influence on estimates, but the outlook for
almost every other sector has fallen as well.
At the start of this year, according to Thomson Reuters data,
analysts were estimating that earnings in 2015 would grow 8.1
percent.
If profit across the board comes in at 1.7 percent higher, 2015
would the worst year for companies in the S&P 500 index since 2009,
when earnings fell 5.5 percent.
![](http://archives.lincolndailynews.com/2015/Mar/13/images/ads/current/sunloan_bch_021315.png) Profit estimates for the first and second quarters already are in
negative territory, with analysts expecting them to decline 2.7
percent and 0.1 percent respectively, the data shows.
That may be a problem for stock investors given concerns about
valuations. The S&P 500 index - whose forward price-to-earnings
ratio of 17.1 is above its historic average of about 15 - is down
roughly 2 percent from its March 2 closing record high.
"It's an open question whether there's any earnings growth this
year," said John Carey, portfolio manager at Pioneer Investment
Management in Boston. "With a market multiple slightly above
long-term averages, you have to ask whether the market's going to go
anywhere."
The surprisingly sharp run-up in the U.S. dollar could be having a
more widespread effect than low oil prices, since almost half of S&P
500 company sales come from overseas, analysts say.
[to top of second column] |
![](http://archives.lincolndailynews.com/2015/Mar/13/images/ads/current/Immanuel_church_lda_031115.png)
"For corporate America, it is the sheer violence of the (dollar's)
move over such a brief period of time that has been troublesome for
multinational companies that can't hedge out the immediacy and
abruptness of that increase," said Mark Luschini, chief investment
strategist at Janney Montgomery Scott in Philadelphia.
The dollar <.DXY> is up more than 23 percent against a basket of
currencies since last June. Against the euro <EUR=>, it has risen
roughly 12 percent year to date.
Analysts have become increasingly pessimistic about energy
companies, after a 55 percent drop in U.S. crude prices <CLc1> since
the end of June. Without the energy sector, the S&P 500's profit for
the full year would be forecast to rise 8.4 percent, Thomson Reuters
data showed.
A 5 percent growth rate for the telecommunications sector is the
only one that has not been revised downward.
(Reporting by Caroline Valetkevitch; Editing by Linda Stern and
Steve Orlofsky)
[© 2015 Thomson Reuters. All rights
reserved.]
Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
![](http://archives.lincolndailynews.com/2015/Mar/13/images/ads/current/LPL_small%201.gif) |