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) 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.

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