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Chicago, IL – March 8, 2021 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes S&P 500 (SPY - Free Report) and small-cap S&P 600 (IJR - Free Report) .
Where Are We with Small-Cap Earnings?
When we are discussing corporate earnings in the aggregate, we are typically using the S&P 500 index as the handy proxy. This makes sense as this broad-based index gives us a diverse and handy view of what’s going on in terms of corporate profitability.
In other words, we can generally say with a high degree of confidence that if the earnings outlook for the large-cap S&P 500 index is improving, then the same must be true for the small-cap indexes as well.
We provide plenty of coverage for what’s happening with the large-cap earnings picture, the latest being this week’s Earnings Trends report >>>> An All-Around Improving Earnings Picture
This note takes a look at the Q4 earnings season and the evolving earnings picture for the current and coming quarters for the small-cap S&P 600 index to see if the aforementioned view makes sense.
Q4 Earnings Season Scorecard
For the S&P 600 index, we now have Q4 results from 551 companies or 91.7% of the index’s total membership. Total earnings for these companies are up +0.6% from the same period last year on +0.7% higher revenues, with 64.8% beating EPS estimates and 75% beating revenue estimates. The proportion of these 551 S&P 600 members that have beaten both EPS and revenue estimates is 53.5%.
Looking at Q4 as a whole for the small-cap index, combining the actual results that have come out with estimates for the still-to-come companies, total S&P 600 earnings are expected to be flat from the year-earlier level (0% growth) on +0.3% higher revenues.
Looking past Q4, the expectation is for an outsized gain in 2021 Q1, with total S&P 600 earnings expected to be up +191.5% on +5.8% higher revenues. Driving the outsized year-over-year gain is easy comparisons, with the year-earlier period experiencing a -68.5% decline as Covid-19 took hold.
Favorable Revisions Trend
As we have been consistently pointing out, the revisions trend has been positive, with estimates for the current and coming quarters steadily going up.
The Annual Picture
Total S&P 600 earnings are on track to be down -28.8% on -9.3% lower revenues in 2020, with a very strong rebound expected this year and beyond.
For the large-cap index, 2021 earnings are expected to be up +28.6% on +9% higher revenues, which would follow the -16.8% decline on -2.9% lower revenues in 2020.
We have to keep in mind the variance in sector distribution between the large- and small-cap indexes. For example, the Technology sector accounts for 30.7% of the S&P 500 index’s total market capitalization, while this sector accounts for only 13.7% of the small-cap index’s market capitalization. The Finance sector is a much bigger part of the small-cap index (25.1%) than it is of the large-cap index (13.8%).
There are other smaller differences as well, but these two large sectors give these indexes altogether different flavors.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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SPY and IJR are part of Zacks Earnings Preview
For Immediate Release
Chicago, IL – March 8, 2021 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes S&P 500 (SPY - Free Report) and small-cap S&P 600 (IJR - Free Report) .
Where Are We with Small-Cap Earnings?
When we are discussing corporate earnings in the aggregate, we are typically using the S&P 500 index as the handy proxy. This makes sense as this broad-based index gives us a diverse and handy view of what’s going on in terms of corporate profitability.
In other words, we can generally say with a high degree of confidence that if the earnings outlook for the large-cap S&P 500 index is improving, then the same must be true for the small-cap indexes as well.
We provide plenty of coverage for what’s happening with the large-cap earnings picture, the latest being this week’s Earnings Trends report >>>> An All-Around Improving Earnings Picture
This note takes a look at the Q4 earnings season and the evolving earnings picture for the current and coming quarters for the small-cap S&P 600 index to see if the aforementioned view makes sense.
Q4 Earnings Season Scorecard
For the S&P 600 index, we now have Q4 results from 551 companies or 91.7% of the index’s total membership. Total earnings for these companies are up +0.6% from the same period last year on +0.7% higher revenues, with 64.8% beating EPS estimates and 75% beating revenue estimates. The proportion of these 551 S&P 600 members that have beaten both EPS and revenue estimates is 53.5%.
Looking at Q4 as a whole for the small-cap index, combining the actual results that have come out with estimates for the still-to-come companies, total S&P 600 earnings are expected to be flat from the year-earlier level (0% growth) on +0.3% higher revenues.
Looking past Q4, the expectation is for an outsized gain in 2021 Q1, with total S&P 600 earnings expected to be up +191.5% on +5.8% higher revenues. Driving the outsized year-over-year gain is easy comparisons, with the year-earlier period experiencing a -68.5% decline as Covid-19 took hold.
Favorable Revisions Trend
As we have been consistently pointing out, the revisions trend has been positive, with estimates for the current and coming quarters steadily going up.
The Annual Picture
Total S&P 600 earnings are on track to be down -28.8% on -9.3% lower revenues in 2020, with a very strong rebound expected this year and beyond.
For the large-cap index, 2021 earnings are expected to be up +28.6% on +9% higher revenues, which would follow the -16.8% decline on -2.9% lower revenues in 2020.
We have to keep in mind the variance in sector distribution between the large- and small-cap indexes. For example, the Technology sector accounts for 30.7% of the S&P 500 index’s total market capitalization, while this sector accounts for only 13.7% of the small-cap index’s market capitalization. The Finance sector is a much bigger part of the small-cap index (25.1%) than it is of the large-cap index (13.8%).
There are other smaller differences as well, but these two large sectors give these indexes altogether different flavors.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
See 3 crypto-related stocks now >>
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.