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Likely Small-Cap Sector ETF Winners In Light of Q2 Earnings
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Small-cap stocks have rebounded recently after staging a lackluster performance in the past one year. SPDR Portfolio S&P 600 Small Cap ETF (SPSM - Free Report) has gained 9.5% past year (as of Jul 12, 2024) versus 24.6% gains in the SPDR S&P 500 ETF TrustETF (SPY - Free Report) . But things are taking a turn for the better for the pint-sized stocks as talks of sooner-than-expected Fed rate cuts are doing rounds.
Now, it’s earnings time. Investors must be interested in knowing how the earnings picture is evolving for the small-cap segment. That would give investors a clear idea in assessing the future performance of the small-cap segment.
Projected Q4 Performance: S&P 600 Versus 500
Per Zacks Earnings Trends issued on Jul 10, 2024, the S&P 500 earnings are projected to increase 8% in Q2 on 4.6% higher revenues. This increment in earnings will follow a 7.1% increase in Q1. Revenue growth in Q2 was 4.4%.
Looking at Q2 as a whole for the small-cap index, total earnings are expected to be down 2.9% from the same period last year on 5.9% higher revenues. This will follow 25.6% earnings decline in Q1. Revenue growth in Q1 was 1.2%. This shows that the earnings picture of the small-cap segment is also improving.
Against this backdrop, below we highlight a few small-cap sector ETFs that have reported a better earnings and revenue growth rate in the second quarter earnings season.
The space is expected to report 53.3% earnings growth on revenue growth of 9.2% in the second quarter. The likely decline in Fed rates in the coming days is a plus for regional bank stocks as it would boost banks’ net interest margin.
The consumer staples sector generally acts as a safe haven amid political and economic turmoil. Stocks in these sectors generally outperform during periods of low-to-moderate economic growth and high uncertainty. Earnings are likely to be up 4.5% year over year on 12.9% higher revenues.
Construction — Invesco Building & Construction ETF (PKB - Free Report)
Upbeat activities in infrastructure and industrials sectors probably have made the sector a winner. Earnings are likely to be up 2.8% year over year on 5.1% higher revenues. About 50% of the holdings of the fund is invested in the small-cap stocks while 40% of the stocks fall in the mid-cap category.
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Likely Small-Cap Sector ETF Winners In Light of Q2 Earnings
Small-cap stocks have rebounded recently after staging a lackluster performance in the past one year. SPDR Portfolio S&P 600 Small Cap ETF (SPSM - Free Report) has gained 9.5% past year (as of Jul 12, 2024) versus 24.6% gains in the SPDR S&P 500 ETF Trust ETF (SPY - Free Report) . But things are taking a turn for the better for the pint-sized stocks as talks of sooner-than-expected Fed rate cuts are doing rounds.
Now, it’s earnings time. Investors must be interested in knowing how the earnings picture is evolving for the small-cap segment. That would give investors a clear idea in assessing the future performance of the small-cap segment.
Projected Q4 Performance: S&P 600 Versus 500
Per Zacks Earnings Trends issued on Jul 10, 2024, the S&P 500 earnings are projected to increase 8% in Q2 on 4.6% higher revenues. This increment in earnings will follow a 7.1% increase in Q1. Revenue growth in Q2 was 4.4%.
Looking at Q2 as a whole for the small-cap index, total earnings are expected to be down 2.9% from the same period last year on 5.9% higher revenues. This will follow 25.6% earnings decline in Q1. Revenue growth in Q1 was 1.2%. This shows that the earnings picture of the small-cap segment is also improving.
Against this backdrop, below we highlight a few small-cap sector ETFs that have reported a better earnings and revenue growth rate in the second quarter earnings season.
Sector ETFs in Focus
Finance – Invesco S&P SmallCap Energy ETF (PSCE - Free Report)
The space is expected to report 53.3% earnings growth on revenue growth of 9.2% in the second quarter. The likely decline in Fed rates in the coming days is a plus for regional bank stocks as it would boost banks’ net interest margin.
Consumer Staples – Invesco S&P SmallCap Consumer Staples ETF (PSCC - Free Report)
The consumer staples sector generally acts as a safe haven amid political and economic turmoil. Stocks in these sectors generally outperform during periods of low-to-moderate economic growth and high uncertainty. Earnings are likely to be up 4.5% year over year on 12.9% higher revenues.
Construction — Invesco Building & Construction ETF (PKB - Free Report)
Upbeat activities in infrastructure and industrials sectors probably have made the sector a winner. Earnings are likely to be up 2.8% year over year on 5.1% higher revenues. About 50% of the holdings of the fund is invested in the small-cap stocks while 40% of the stocks fall in the mid-cap category.