This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Downhill From Profit Peak

Though profit estimates have been coming down lately, the fourth-quarter earnings season promises to be another good one, at least by historical standards.

But with the outlook for the first quarter decidedly less rosy, investors may have a hard time appreciating the results.

Analysts surveyed by Thomson First Call are now looking for 15.3% growth in the final three months of 2004, more than double the long-term average, thanks to respectable economic growth, a weaker dollar and a continued focus on keeping costs low.

Layoffs remained above 100,000 for a fourth straight month in December, according to outplacement firm Challenger, Gray & Christmas. And the latest nonfarm payroll report showed that hiring and wage increases have been modest.

The passage of last year's American Jobs Creation Act, which, among other things, allows companies to repatriate foreign income at a temporarily reduced tax rate, could also provide some relief this earnings season. In December, FedEx (FDX - Get Report) reported a 4-cent gain as a result of the new tax law.

Michael Metz, chief investment officer at Oppenheimer & Co., said he considers the chances of any major negative surprises to be low.

"There's not going to be any real significant disappointment or we'd have heard about it by now," he said. "The new year is starting off very well."

Indeed, the negative-to-positive preannouncement ratio is down from the third quarter and slightly below the historical average. Since the start of September, profit estimates have gone up, though they are down from the start of November, when analysts were looking for 15.7% growth.

Metz said any enthusiasm over fourth-quarter results is likely to be short-lived, noting that double-digit growth probably won't be repeated in the first and second quarters of 2005.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
DAL $41.76 0.02%
FDX $160.53 0.10%
UPS $101.95 -0.19%
AAPL $92.11 -1.20%
FB $119.22 1.20%


Chart of I:DJI
DOW 17,686.22 +25.51 0.14%
S&P 500 2,050.14 -0.49 -0.02%
NASDAQ 4,710.2950 -6.7990 -0.14%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs