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Best Small-Cap Sector ETFs Amid Q2 Earnings Season
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Small-cap stocks have lagged the broader market index in the ongoing Q2 earnings reporting season by a slight margin.The S&P 600 Index has lost about 5.5% past month (as of Aug 18, 2023) versus 4.3% losses in the S&P 500. As much as 92.2% of the S&P 600 companies have reported so far.
Investors may also 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-struggling small-cap segment.
Q2 Performance: S&P 600
Per Zacks Earnings Trends issued on Aug 16, 2023, 85.7% of total S&P 600 market cap has reported earnings. Earnings are down 26.5% on 5.2% decline in revenues. Earnings beat ratio was 62.6% while revenue beat ratio was 42.1%. Looking at Q2 as a whole for the small-cap index, total earnings are expected to be down 27.5% from the same period last year on 4.6% lower revenues.
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 second-quarter reporting season.
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. About 76% of the companies listed in the S&P 600 have reported with earnings beat ratio of 84.2% and revenue beat ratio of 73.7%. Earnings are up 14.5% so far on 0.1% higher revenues. Overall, earnings are likely to be down 3.2% year over year on 0.5% higher revenues.
Construction — Invesco Dynamic Building & Construction ETF (PKB - Free Report)
About 89.5% of the companies have reported so far with earnings beat ratio of 82.4% and revenue beat ratio of 76.5%. Earnings are down 27.1% on 11.7% lower revenues. Overall, earnings are likely to be down 27.2% year over year on 10.4% lower revenues. The space may emerge as a beneficiary of the Build America, Buy America Act (BABA), which is enacted as part of the Infrastructure Investment and Jobs Act (IIJA).
About 94.9% of the companies have reported so far with earnings beat ratio of 59.5% and revenue beat ratio of 70.3%. Earnings are down 14.7% on 7.8% lower revenues. Overall, earnings are likely to be down 18.7% year over year on 7.6% lower revenues.
About 76.9% of the companies have reported so far with earnings beat ratio of 70% and revenue beat ratio of 53.3%. Earnings are down 27.8% on 0.3% lower revenues. Overall, earnings are likely to be down 32.4% year over year on 1.8% lower revenues. Retail sales have been decent lately. The advanced retail sales report showed a seasonally adjusted increase of 0.7% in July, while spending rose 1% excluding autos. Both were better than the 0.4% estimates.
About 92.9% of the companies have reported so far with earnings beat ratio of 66.2% and revenue beat ratio of 63.1%. Earnings are down 35.1% on 3.6% lower revenues. Overall, earnings are likely to be down 38.9% year over year on 2.7% lower revenues. The AI boom has benefited the space as many small-cap tech companies develop and implement AI products and AI-based solutions for companies in various industries.
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Best Small-Cap Sector ETFs Amid Q2 Earnings Season
Small-cap stocks have lagged the broader market index in the ongoing Q2 earnings reporting season by a slight margin. The S&P 600 Index has lost about 5.5% past month (as of Aug 18, 2023) versus 4.3% losses in the S&P 500. As much as 92.2% of the S&P 600 companies have reported so far.
Investors may also 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-struggling small-cap segment.
Q2 Performance: S&P 600
Per Zacks Earnings Trends issued on Aug 16, 2023, 85.7% of total S&P 600 market cap has reported earnings. Earnings are down 26.5% on 5.2% decline in revenues. Earnings beat ratio was 62.6% while revenue beat ratio was 42.1%. Looking at Q2 as a whole for the small-cap index, total earnings are expected to be down 27.5% from the same period last year on 4.6% lower revenues.
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 second-quarter reporting season.
Sector ETFs in Focus
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. About 76% of the companies listed in the S&P 600 have reported with earnings beat ratio of 84.2% and revenue beat ratio of 73.7%. Earnings are up 14.5% so far on 0.1% higher revenues. Overall, earnings are likely to be down 3.2% year over year on 0.5% higher revenues.
Construction — Invesco Dynamic Building & Construction ETF (PKB - Free Report)
About 89.5% of the companies have reported so far with earnings beat ratio of 82.4% and revenue beat ratio of 76.5%. Earnings are down 27.1% on 11.7% lower revenues. Overall, earnings are likely to be down 27.2% year over year on 10.4% lower revenues. The space may emerge as a beneficiary of the Build America, Buy America Act (BABA), which is enacted as part of the Infrastructure Investment and Jobs Act (IIJA).
Industrial Products – Invesco S&P SmallCap Industrials ETF (PSCI - Free Report)
About 94.9% of the companies have reported so far with earnings beat ratio of 59.5% and revenue beat ratio of 70.3%. Earnings are down 14.7% on 7.8% lower revenues. Overall, earnings are likely to be down 18.7% year over year on 7.6% lower revenues.
Consumer Discretionary – Invesco S&P SmallCap Consumer Discretionary ETF (PSCD - Free Report)
About 76.9% of the companies have reported so far with earnings beat ratio of 70% and revenue beat ratio of 53.3%. Earnings are down 27.8% on 0.3% lower revenues. Overall, earnings are likely to be down 32.4% year over year on 1.8% lower revenues. Retail sales have been decent lately. The advanced retail sales report showed a seasonally adjusted increase of 0.7% in July, while spending rose 1% excluding autos. Both were better than the 0.4% estimates.
Technology – Invesco S&P SmallCap Information Technology ETF (PSCT - Free Report)
About 92.9% of the companies have reported so far with earnings beat ratio of 66.2% and revenue beat ratio of 63.1%. Earnings are down 35.1% on 3.6% lower revenues. Overall, earnings are likely to be down 38.9% year over year on 2.7% lower revenues. The AI boom has benefited the space as many small-cap tech companies develop and implement AI products and AI-based solutions for companies in various industries.