View from the Observation Deck  

Today's charts are intended to give investors a visual perspective on historical and estimated earnings performance for the S&P 500 Index (“LargeCap Index”), the S&P MidCap 400 Index (“MidCap Index”), and the S&P SmallCap 600 Index (“SmallCap Index”). The charts track each Index’s quarterly earnings per share (EPS) from Q2’24 through Q1’26. They also include Bloomberg’s estimated EPS for Q2’26.

As the charts reveal, each of the three indices saw EPS increase year-over-year (y-o-y) in Q1’26.

Year-over-year EPS increased by 13.6% (LargeCap Index) and 11.7% (MidCap Index), and 6.6% (SmallCap Index) so far in Q1’26 (through 5/13).

Earnings growth is expected to surge in Q2’26, with estimates revealing double-digit year-over-year increases for each of the three indices.

Analyst estimates reveal year-over-year earnings are expected to increase by 26.4%, 23.9%, and 42.4% for the LargeCap, MidCap, and SmallCap Indices, respectively, in Q2’26.

Looking ahead, estimated 2026 calendar year EPS for each Index were as follows (not in the charts): S&P 500 Index (337.25); S&P MidCap 400 Index (215.64); S&P SmallCap 600 Index (103.72). 

Year-over-year earnings growth rates implied by these estimates are as follows: S&P 500 Index (+25.3%); S&P MidCap 400 Index (+21.4%); S&P SmallCap 600 Index (+18.8%). Calendar year 2026 estimates are particularly notable for the LargeCap and SmallCap Indices given tough comparisons from the previous year. Data from Bloomberg shows that LargeCap and SmallCap earnings increased by 12.5% and 8.5%, respectively, in 2025. 

Takeaway: Our last post provided insight into the earnings beat rate of the broader S&P 500 Index. Today’s discussion expands our view to include the earnings climate of the mid and small-cap segments of the U.S. equity market. We believe that corporate earnings drive the direction of stock prices over time, especially when the major indices are trading at or near record highs. Tellingly, the S&P 500 Index’s trailing 12-month price return of 30.6% (through 5/8/26) nearly matches its Q1’26 year-over-year earnings growth rate of 27.7% as of the same date. Analyst estimates have increased as the year has unfolded, with LargeCap, MidCap, and SmallCap Index EPS estimated to reach a record 337.25, 215.64, and 103.72, respectively, in 2026 (as of 5/13/26). For comparison, analyst estimates were much lower at the start of the year, with the same indices estimated to see calendar year 2026 earnings of 310.84, 202.91, and 96.06 on 12/31/25. As always, these are estimates and are subject to change (and have changed since our last post). We will continue to report back as developments warrant.

This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions and other expenses incurred when investing. Investors cannot invest directly in an index. The S&P 500 Index is an unmanaged index of 500 companies used to measure large-cap U.S. stock market performance. The S&P MidCap 400 Index is a capitalization-weighted index that tracks the mid-range sector of the U.S. stock market. The S&P SmallCap 600 Index is a capitalization-weighted index that tracks U.S. stocks with a small market capitalization.

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