Slim sales mean plump corporate profits aren't built to last

Updated

The economy may still be in the dumps -- don't let yesterday's early reading on gross domestic product fool you into thinking otherwise. But that hasn't kept U.S. companies from posting bigger-than-expected profits. In fact, four out of every five members of the S&P 500 that reported third-quarter earnings in recent weeks exceeded analysts' estimates, according to data compiled by Thomson Reuters.

But what seems like great news at first glance looks a lot less impressive upon closer inspection. Just as many market observers feared before earnings season got underway, plenty of these companies are trimming costs rather than boosting sales, which means they probably won't be able to outperform expectations much longer.

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