U.S. 2015 profits forecast to grow 1.7 percent; oil, dollar are concerns

Fri Mar 13, 2015 7:17am EDT
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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.

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.   Continued...

A Wall St. sign is seen in New York's financial district September 16, 2008. REUTERS/Lucas Jackson