How the dollar's sharp reversal could be an unexpected positive for these companies

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Companies griped about the strong dollar's impact on sales last year, but now a falling dollar could help cushion earnings and provide some upside surprises.

While everyone it seems awaits a downturn in earnings, there's one bright spot that could help cushion profits and revenues of tech and other multinational corporations. Companies with big foreign sales exposure griped about the soaring dollar when they reported earnings last spring, summer and fall. But with the dollar's stunning reversal since then, some companies should conversely start to catch a currency break and potentially see upside surprises.

"Given that sell-side estimates typically don't reflect changes in currency , we see a weakening dollar as a cushion to Q4 and 2023 estimates." Sacconaghi said it's difficult to estimate the impact on earnings per share from dollar weakness, but he expects the impact to be positive on the bottom line, as well. He noted that Hewlett Packard Enterprises in October told investors that the strong dollar would hurt earnings per share by 15% in fiscal 2023.

 

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