Corporate profits have been among the brightest lights of the economic recovery, helping to lift the stock market more than 25 percent since October.
But analysts predict that when the first-quarter reporting season starts in earnest next week, American companies will show the slowest rate of growth in operating earnings in three years.
One widely used gauge of profits, the Standard & Poor’s Capital IQ survey, forecasts that earnings will have grown 0.93 percent in the first quarter, compared with the first quarter of 2011, for the companies that make up the S.& P. 500-stock index. That would bring the value of one share of the index to $23.85.
In the same period last year, operating earnings per index share were $23.63, a result of 19.68 percent growth from the first quarter in 2010.
“It is the lowest quarter of growth we have seen since the third quarter of 2009,” said Christine Short, the senior manager for S.& P. Global Markets Intelligence. Other surveys, by Thomson Reuters and FactSet, show similar trends of weak first-quarter growth compared with the year before.
Many companies struggled through the difficult period since the 2008 financial crisis by trimming costs and laying off employees to help rebuild their bottom lines. Now analysts say that the cutbacks may have reached their limits and that profits could very well have peaked in the second half of last year.Page 1 of 4 | Next Page