article 05-17-2017

Francis Gannon on Small-Cap Earnings Growth in MarketWatch

Co-CIO Francis Gannon speaks with MarketWatch about wage growth and encouraging small-cap company earnings.  

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Co-CIO Francis Gannon discussed the positive earnings growth for smaller companies with MarketWatch in the article "Could rising wages scuttle the small-cap stock surge?"

Despite rising wages and the potential impact on small-caps due to domestic exposure, Francis remains optimistic for the asset class. He told journalist Rachel Koning Beals that so far, "About 49% of small-cap companies have already reported first-quarter earnings. To date, earnings growth for the Russell 2000 is up 9.7% year over year versus expectations of growth of 5.9%."

He also highlighted many small-cap companies' global footprint: "Industrial and technology small-caps are actually more global, and that could be beneficial now that Europe and emerging market economies are doing better."

Last, Francis explains where he sees potential small-cap opportunities, especially in industrials.

For additional information on small-cap earnings and why Francis remains positive on earnings reports thus far, please read his most recent blog post here.

Read the MarketWatch article here.

Important Disclosure Information

The thoughts and opinions expressed in the article are solely those of the persons speaking as of May 12, 2017, and may differ from those of other Royce investment professionals, or the firm as a whole. There can be no assurance with regard to future market movements.

The Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. The Russell 2000 Index is an unmanaged, capitalization-weighted index of domestic small-cap stocks. It measures the performance of the 2,000 smallest publicly traded U.S. companies in the Russell 3000 Index. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index.

This material is not authorized for distribution unless preceded or accompanied by a current prospectus. Please read the prospectus carefully before investing or sending money. Smaller-cap stocks may involve considerably more risk than larger-cap stocks. (Please see "Primary Risks for Fund Investors" in the prospectus.)

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