U.S. Companies Are More Positive on Profit, Aiding Stock Rally

Bloomberg ^ | 10/12/03 | BG

[Pikamax]

U.S. Companies Are More Positive on Profit, Aiding Stock Rally Oct. 12 (Bloomberg) -- U.S. companies' third-quarter profit predictions have been the most positive of the year, reinforcing optimism that growth will be fast enough to sustain this year's 18 percent advance in the Standard & Poor's 500.

[AntiGuv]

One would hope so considering after-tax profits declined 3.4% in the second quarter and another 5.0% in the third quarter..

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[LiberalBuster]

That would certainly explain why the insider sell to buy ratio is so high. We haven't seen corporate insiders bailing in such large numbers since 1999. And, we all know what came next.

I suppose all this insider selling could just be executives selling to "break even" after a 3-year bear market. But, one should definitely think twice before committing more money to the market while those "in the know" continue to vote "no-confidence" in such large numbers.

Remember also that corporate insiders need people to sell their shares to (read: Joe Investor who doesn't have inside information), so one might question what kind of smoke corporate spokespeople might be blowing when they say things are good.

[Uncle Miltie]

Good News Bump!

[Starwind]

Quality is yet unknown. I would expect much of the profit to come from more favorable foreign exchange rates, assumed pension asset valuations, and cost cutting. If the article had said sales & revenue growth, I'd be impressed.

[WilliamofCarmichael]

"There has been so much cost cutting that companies are going to do pretty well with some growth," said Joslyn Berndt Dobson, who helps manage $600 million at Piedara Capital Ltd. in Austin, Texas. "All the fat has been cut out."

Back to increasing earnings the old fashion way, sales.