Investors are paying about 11 percent more for each dollar of projected earnings than they did at the beginning of 1997. Strength in numbers. For the quarter that has just ended, most forecasters expect an overall earnings gain of 10 to 12 percent over the same quarter in 1996. Earnings in the airline industry, to take one sector, surged 90 percent in this year's first quarter but are expected to drop by some 5 percent for the second. After making such seasonal adjustments, however, the second quarter looks as if it will be about as strong as the first.
Analysts are divided about what the future holds.
But analysts who follow individual companies are bullish. They predict extraordinary profit gains of 13 percent in 1997 and a further leap to 15.4 percent in 1998. And for the next five years, they forecast corporate profits to compound at an average annual rate of 12 percent, or almost twice the long-term trend. But extended forecasts by analysts of above-average earnings gains require an adjustment in perspective. But it would be a mistake to dismiss the comparison entirely.