View from the Observation DeckToday’s chart offers a study of the annual earnings per share (“EPS”) of four prominent U.S. equity indices between 2012 and 2025, as well as current estimates for the 2026 calendar year. Our data set includes the S&P 500, S&P 500 Equal Weight (“Equal Weight Index”), S&P MidCap 400 (“MidCap Index”), and S&P SmallCap 600 (“SmallCap Index”) Indices, with initial observations normalized to a base of 100.
EPS for the S&P 500 Index increased more slowly than SmallCap and MidCap (“SMID”) Indices’ EPS over the same time frame.
Despite this, the S&P 500 Index outperformed its peers over the period covered in today’s chart. The SmallCap Index posted the lowest average annual total returns, even with the largest increase in normalized EPS over the period. Below are the average annual total returns for these indices (December 31, 2012 - October 13, 2026):
S&P 500 Index: 15.13%S&P 500 Equal Weight Index: 12.69%S&P MidCap 400 Index: 11.39%S&P SmallCap 600 Index: 11.13%
Resurgent earnings among SMID caps hint at potential opportunity ahead.
In 2022, EPS for the MidCap and SmallCap Indices peaked at 193.81 and 90.87, respectively, before declining in 2023 and 2024 (the MidCap Index declined again in 2025). Analyst estimates call for a dramatic turnaround in 2026, with EPS estimated to surge to record levels by year-end. Calendar-year 2026 EPS estimates stood at 226.95 and 108.40 for the MidCap and SmallCap Indices, respectively, as of October 13, 2026, representing increases of 28.0% and 24.5% year-over-year. For comparison, earnings are estimated to increase by 32.4% for the S&P 500 Index and 21.0% for the Equal Weight Index as of the same date.
Valuations for the Equal Weight, MidCap, and SmallCap Indices sit below historical averages, even as EPS estimates increase.
The S&P 500, Equal Weight, MidCap, and SmallCap Indices had forward 12-month price-to-earnings (“P/E”) ratios of 21.5, 16.8, 16.1, and 15.4, respectively, on October 13, 2026. By comparison, their P/Es averaged 20.0, 18.3, 18.5, and 19.5, respectively, between December 31, 2012, and December 31, 2025.
Takeaway: As the chart reveals, earnings growth at small and mid-sized companies has outpaced that of the broader S&P 500 Index since 2012. Even so, the S&P 500 Index has seen the highest total return over the same period. While these returns may be warranted, especially given record corporate profitability among S&P 500 Index constituents and efficiency gains from AI, we remain steadfast in our belief that corporate earnings drive the direction of stock prices over time. Given the combination of record-high earnings estimates and unusually weak relative performance, investors could potentially benefit by broadening their equity holdings to include SMID cap companies. Several notes of caution: earnings estimates are just that—estimates, which can change at a moment’s notice. Additionally, SMID cap stocks are generally more sensitive to changes in the cost of capital, which could continue to rise should inflation remain elevated. While there are myriad ETFs and mutual funds focused on purchasing companies in these spaces, their constituent selection methodology could contribute meaningfully to returns, in our opinion.
This chart is for illustrative purposes only and not indicative of any actual investment. There can be no assurance that any of the projections cited will occur. The illustration excludes the effects of taxes and brokerage commissions or other expenses incurred when investing. Investors cannot invest directly in an index. The S&P 500 Index is an unmanaged index of 500 stocks used to measure large-cap U.S. stock market performance. The S&P Midcap 400 Index is a capitalization-weighted index which measures the performance of the mid-range sector of the U.S. stock market. The S&P Smallcap 600 Index is a capitalization-weighted index that measures the performance of selected U.S. stocks with a small market capitalization. The S&P 500 Equal Weight Index is the equal-weight version of the S&P 500 Index.
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