(Bloomberg News) Analysts are increasing sales forecasts for Standard & Poor's 500 Index companies by the most in three years, compensating investors as the biggest expansion in profitability since 2002 ends.

Revenue will climb 10 percent in 2011, twice last year's rate, as personal income and corporate spending recover, according to data from analysts compiled by Bloomberg. Net margin estimates were unchanged the past two months after rising more than 50 percent since 2009. The measure of income divided by revenue increased to 13.4 percent in the first quarter from 8.2 percent in October 2009, Bloomberg data show.

Companies that boosted profits by firing workers and closing factories in the first two years of the expansion are running out of opportunities to reduce costs, requiring sales gains to keep growing. While bears say U.S. businesses will fail to increase revenue fast enough to justify higher stock prices, chief executive officers at Caterpillar Inc. and Coventry Health Care Inc. have raised forecasts.

"In the early part of the recovery, the CEO focuses on efficiency, productivity and margin enhancing, until their sales kick in," said James Paulsen, the chief investment strategist at Minneapolis-based Wells Capital, which oversees $340 billion. "Once that happens, that emphasis on margins starts to fade. What looks on the surface as something you'd check off as bad is actually an indication that things are getting better."

Caterpillar, Coventry

Caterpillar, the world's largest maker of construction equipment, and Coventry Health, an insurer based in Bethesda, Maryland, posted higher profits when sales retreated, according to data compiled by Bloomberg. Each has rallied after boosting revenue, the data show.

The S&P 500 fell 0.2 percent between June 17 and June 24, dropping for the seventh time in eight weeks. The gauge has surged 87 percent to 1,268.45 since reaching a 12-year low in March 2009 during the 18-month recession, the longest since the 43-month slump of the Great Depression, according to the National Bureau of Economic Research. The index rose 0.7 percent at 10:34 a.m. today.

Analysts have boosted estimates for S&P 500 sales growth in 2011 to 10 percent, compared with 5.2 percent last year and a decline of 9.1 percent in 2009.

Income Rising

Personal income for Americans increased 0.3 percent in May for the second month, according to Commerce Department data today. Income is rising at an average rate of 0.5 percent a month in 2011, versus 0.3 percent in 2010, Commerce Department data show. Capital spending by companies in the index may jump 21 percent this year, according to the median estimate of analysts compiled by Bloomberg. Retail sales excluding cars increased 0.3 percent last month, topping economist predictions for a 0.2 percent gain, the data show.