AIG Looks Poised for Second-Straight Profit

Updated for latest share price.

NEW YORK (TheStreet) -- American International Group(AIG Quote) is set to report its third-quarter results before Friday's opening bell, and while the headline profit number could get a lift from asset mark-ups, investors should likely pay more attention to the insight the company offers on the state of its balance sheet.

The stock gaining steam towards the close. It was recently changing hands at $39.23, up 8.4% for the session, pulling back slightly after running as high $39.95 before shying away from breaking through $40. Still, the advance is a healthy rebound after the shares slumped below $34 earlier in the week. Even at $40, the stock would still be more than 10% below its forays above $45 in late September. Volume crested 26 million with less than 30 minutes of trading left, well below the issue's 30-day daily average churn of 45.2 million.

The current average estimate of analysts polled by Thomson Financial is for a profit of $1.20 a share in the September period on revenue of $23.billion but given the many moving parts in AIG's portfolio, it can be difficult to predict results. For example, Wall Street's consensus estimate for the second quarter ended in June was for a profit of $1.67 a share but AIG reported earnings of $2.57 a share, marking its first quarter in the black since mid-2007.

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Credit Suisse recently previewed the quarter, and the note was indicative of how tough it is to assess the company's prospects in its current state. On the one hand, the firm boosted its earnings estimate for the quarter to $4.50 a share from $1.40, citing expectations for big mark-to-market gains because of strength in the fixed income markets, including $2.5 billion write-up in the value of AIG's Financial Products portfolio likely to stem from improvements in those pesky credit default swaps on mortgage-backed securities.