Stronger U.S. Dollar Could Cut 2006 Profits

June 13, 2005
On a trade-weighted basis the U.S. dollar is up 3% so far this year, a sharp contrast to the consensus forecast of 10% decline in 2005, notes Merrill Lynch & Co. "In fact, if the dollar stays where it is right now, there is a possibility of an outright ...

On a trade-weighted basis the U.S. dollar is up 3% so far this year, a sharp contrast to the consensus forecast of 10% decline in 2005, notes Merrill Lynch & Co. "In fact, if the dollar stays where it is right now, there is a possibility of an outright decline in profits next year," says the New York-based financial firm.

Its economists calculate that if the dollar holds onto this year's appreciation, the consensus forecast on earnings-per-share for the S&P 500 for 2005 would decline to $72.80 from $74.50 this year and to $75 from $82 for 2006. Even Merrill's EPS forecast, which has been lower than the consensus because it factors in less of a dollar decline, would be cut -- to $71.50 from $72.20 this year and to $71 from $76.25 in 2006.

When the U.S. dollar rises, tech hardware, forest products, steel and mining stocks are among those that most underperform, adds Merrill.

Popular Sponsored Recommendations

Process Mining For Dummies

Nov. 19, 2023
Here it is. Everything you need to know about process mining in a single book, written in the easy-to-understand, hard-to-forget style that ‘For Dummies’ manages so effortlessly...

Beat the odds. Optimize product costs. Mitigate supply chain issues.

Sept. 12, 2023
Leverage fact-based supplier negotiations. Enhance design. Get to market faster. Our comprehensive Should Cost Analysis guide shows you how.

Digitally Transforming Data and Processes With Product Lifecycle Management

Oct. 29, 2023
Manufacturers face increasing challenges in product development as they strive to consistently deliver improved results. Discover how industry leaders are improving time-to-market...

Legacy Phone Lines Are Draining Your Profits

Oct. 30, 2023
Copper wire phone line expenses that support emergency devices could be costing your company millions of dollars in wasteful overhead expenses. Rates have been skyrocketing while...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!