Companies in the S&P 500 are expected to record double-digit gains in operating earnings for the 15th-straight quarter. Aggregate earnings are expected to reach a record $186 billion in the fourth quarter, or $20.62 per share, up 14.9% from a year earlier, according to Standard & Poor's.
"We are looking for some good numbers for the fourth quarter and first quarter" of 2006, said Howard Silverblatt, equity market analyst at S&P. "That said, double-digit gains are coming to an end."
He said corporate earnings throughout 2005 were bolstered by consumer spending, which has not deteriorated in the face of rising interest rates. Earnings at many companies also appear strong relative to year-ago results because of stock buybacks, which have reduced the number of shares outstanding.
"Beyond the first quarter, you get a lot of ifs, ands and buts," Mr. Silverblatt said, explaining that interest rates, energy prices and inflation could all pressure corporate profits in 2006.
For all of 2005, S&P 500 companies are forecast to earn a total of $76.89 a share, or $699 billion, compared with $67.68, or $630 billion, in 2004, according to S&P.
In addition to record earnings, S&P 500 companies are expected to report a record $202 billion in dividend payments for 2005 and record corporate share buybacks totaling $315 billion.