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Small-Cap Sector ETFs to Tap In Light of Q4 Earnings
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Small-cap stocks have been staging a decent performance in recent times.SPDR S&P 600 Small Cap ETF has gained 7.4% this year (as of Mar 6, 2023) versus 5.4% gains in the S&P 500. But things are taking a turn for the better for the pint-sized stocks as these have less domestic exposure and outperforms in a rising greenback environment.
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 an otherwise still-undervalued small-cap segment.
Projected Q4 Performance: S&P 600 Versus 500
Per Zacks Earnings Trends issued on Mar 1, 2023, the S&P 500 earnings are projected to decline 5.6% in Q4 on 5.8% higher revenues. This increment in earnings will follow a 1.6% increase in Q3. Revenue growth in Q3 was 11.7%.
Looking at Q4 as a whole for the small-cap index, total earnings are expected to be down 16.4% from the same period last year on 7.1% higher revenues. The growth in earnings will follow a 2.9% expansion in Q3. Revenue growth in Q3 was 14.6%.
Against this backdrop, below we highlight a few small-cap sector ETFs that have reported a better earnings and revenue growth rate in the about-to-end fourth-quarter reporting season.
Sector ETFs in Focus
Energy – Invesco S&P SmallCap Energy ETF (PSCE - Free Report)
The oil rally of this year is known to all. Restricted global supplies amid supply-chain issues and geopolitical concerns and higher demand made the space a winner. The space is expected to report 215.3% earnings growth on revenue growth of 48.5% in the about-to-end fourth quarter.
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 economic growth and high uncertainty. Earnings are likely to be up 20.3% year over year on 5.1% higher revenues.
Upbeat activities in infrastructure and industrials sectors made demand for materials high. Orders of Chemical Products remained strong. Earnings are likely to be up 40.0% year over year on 14.8% higher revenues.
The utilities sector is a great investment for those seeking yields and safety but should be avoided by those expecting market-beating returns. It is among the most stable sectors over the long haul and its players are likely to be decent investments. Earnings are likely to be up 7.2% year over year in the ongoing fourth-quarter reporting season on 20.2% higher revenues.
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Small-Cap Sector ETFs to Tap In Light of Q4 Earnings
Small-cap stocks have been staging a decent performance in recent times.SPDR S&P 600 Small Cap ETF has gained 7.4% this year (as of Mar 6, 2023) versus 5.4% gains in the S&P 500. But things are taking a turn for the better for the pint-sized stocks as these have less domestic exposure and outperforms in a rising greenback environment.
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 an otherwise still-undervalued small-cap segment.
Projected Q4 Performance: S&P 600 Versus 500
Per Zacks Earnings Trends issued on Mar 1, 2023, the S&P 500 earnings are projected to decline 5.6% in Q4 on 5.8% higher revenues. This increment in earnings will follow a 1.6% increase in Q3. Revenue growth in Q3 was 11.7%.
Looking at Q4 as a whole for the small-cap index, total earnings are expected to be down 16.4% from the same period last year on 7.1% higher revenues. The growth in earnings will follow a 2.9% expansion in Q3. Revenue growth in Q3 was 14.6%.
Against this backdrop, below we highlight a few small-cap sector ETFs that have reported a better earnings and revenue growth rate in the about-to-end fourth-quarter reporting season.
Sector ETFs in Focus
Energy – Invesco S&P SmallCap Energy ETF (PSCE - Free Report)
The oil rally of this year is known to all. Restricted global supplies amid supply-chain issues and geopolitical concerns and higher demand made the space a winner. The space is expected to report 215.3% earnings growth on revenue growth of 48.5% in the about-to-end fourth quarter.
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 economic growth and high uncertainty. Earnings are likely to be up 20.3% year over year on 5.1% higher revenues.
Basic Materials — Invesco S&P SmallCap Materials ETF (PSCM - Free Report)
Upbeat activities in infrastructure and industrials sectors made demand for materials high. Orders of Chemical Products remained strong. Earnings are likely to be up 40.0% year over year on 14.8% higher revenues.
Utilities – Invesco S&P SmallCap Utilities & Communication Services ETF (PSCU - Free Report)
The utilities sector is a great investment for those seeking yields and safety but should be avoided by those expecting market-beating returns. It is among the most stable sectors over the long haul and its players are likely to be decent investments. Earnings are likely to be up 7.2% year over year in the ongoing fourth-quarter reporting season on 20.2% higher revenues.