Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Earnings Growth Outlook, Potential Rate Cuts Could Finally Boost Small Cap Stocks By: Spotlight Growth July 12, 2024 at 09:30 AM EDT It has been a tough go for the small-cap-focused Russell 2000 Index (NYSE: IWM). The Index declined 3.3% during the second quarter, while the S&P 500 saw quarterly gains of nearly 4%. Large cap outperformance can largely be attributed to the continued hype around artificial intelligence (AI), cooling inflation, reasonable U.S. economic growth and the impressive resilience of the ‘Magnificent Seven’: Alphabet (NASDAQ: GOOG), Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN), Meta (NASDAQ: META), Microsoft (NASDAQ: MSFT), Nvidia (NASDAQ: NVDA), and Tesla (NASDAQ: TSLA). Source: Royce Investment Partners Despite the heavy focus on larger-cap stocks, small-caps could present a big opportunity for patient long-term investors. On a comparative basis, small-caps are the cheapest relative to large-cap stocks in 25 years. At the same time, the small-cap earnings growth outlook for 2024 is projected to be higher than large-cap stocks. While the long-awaited interest rate cuts by the Federal Reserve could help boost smaller stocks in the short term, big investors are excited about the valuation and earnings growth prospects. Institutional Investors Continue to Hold Bullish Outlook for Small-Cap Stocks In a recent Q&A, Royce Investment Partners’ portfolio manager, Chuck Royce, and co-CIO, Francis Gannon, shared their thoughts on the current state of the small-cap market. In the July 2024 article, Royce and Gannon shared their surprise at the lack of performance of the Russell 2000 Index during Q2 2024. However, the second quarter has not shaken their long-term bullish stance on smaller market cap stocks. Chuck Royce highlighted the historical valuation level of small-caps as a key factor: “…small-caps continue to be far more attractively valued than their larger peers, based on our preferred index valuation metric of EV/EBIT or enterprise value over earnings before interest & taxes.” To investors that may have doubts regarding the long-term prospects of small-caps, Francis Gannon argued: “The Russell 2000 finished June with a near-record number of companies with no earnings, but earnings acceleration is expected to be higher for small-cap companies than for large-cap businesses through the end of 2024.” Source: Royce Investment Partners Mr. Gannon went on to discuss that active managers (stock pickers) have done well with small-caps over the past several years and that a focus on companies showing earnings growth continue to be a promising strategy moving forward. Echoing similar sentiments as Royce, William Muggia, the president of Westfield Capital Management (subadvisor to the Harbor Small Cap Growth Fund), said higher earnings estimates and the historical undervalued state of smaller stocks gives him reasons to be bullish. “I can’t tell you we are at the absolute bottom. But it sure smells like it,” stated Mr. Muggia in a report to Barron’s. ASUR: A Small-Cap with Strong Earnings Growth In the spirit of Royce Investment Partners’ preference for small-caps with a history of growing earnings, Asure Software (NASDAQ: ASUR) is one stock that may be within their wheelhouse. The Texas-based human capital management software solutions provider has continued producing strong top and bottom-line growth since the 2020 pandemic. During Q1 2024, Asure reported total revenue (excluding ERTC) of $30.7 million, which translated to year-over-year growth of 10%. For the full year 2024, management has issued guidance that estimates revenue between $125 million to $129 million on an adjusted EBITDA range of $25 million to $27 million. Considering Asure’s core businesses produced total revenue (excluding ERTC) of $101 million during full-year 2023, the guidance suggests revenues could expand a healthy 26% through 2024. Despite the revenue and earnings growth figures, Asure trades at a discount relative to some of its industry peers. As of March 2024, Asure traded at an enterprise value-to-revenue of 1.3x, compared to an average of 5.7x among Paycor (NASDAQ: PYCR), ADP (NASDAQ: ADP), Paycom (NYSE: PAYC), Paylocity (NASDAQ: PCTY) and Paychex (NASDAQ: PAYX). If Asure were able to reach a similar EV/Revenue valuation of the listed peers above, the implied share price for the small-cap HCM company would range from $20 to $37 per share, showing lots of potential room for growth. Disclaimer: Spotlight Growth is compensated, either directly or via a third party, to provide investor relations services for its clients. Spotlight Growth creates exposure for companies through a customized marketing strategy, including design of promotional material, the drafting and editing of press releases and media placement. All information on featured companies is provided by the companies profiled, or is available from public sources. Spotlight Growth and its employees are not a Registered Investment Advisor, Broker Dealer or a member of any association for other research providers in any jurisdiction whatsoever and we are not qualified to give financial advice. The information contained herein is based on external sources that Spotlight Growth believes to be reliable, but its accuracy is not guaranteed. Spotlight Growth may create reports and content that has been compensated by a company or third-parties, or for purposes of self-marketing. Spotlight Growth was compensated four thousand dollars cash by Asure Software for the creation and dissemination of this content by the company. This material does not represent a solicitation to buy or sell any securities. Certain statements contained herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements with respect to the Company’s plans and objectives, projections, expectations and intentions. These forward-looking statements are based on current expectations, estimates and projections about the Company’s industry, management’s beliefs and certain assumptions made by management. The above communication, the attachments and external Internet links provided are intended for informational purposes only and are not to be interpreted by the recipient as a solicitation to participate in securities offerings. Investments referenced may not be suitable for all investors and may not be permissible in certain jurisdictions. Spotlight Growth and its affiliates, officers, directors, and employees may have bought or sold or may buy or sell shares in the companies discussed herein, which may be acquired prior, during or after the publication of these marketing materials. Spotlight Growth, its affiliates, officers, directors, and employees may sell the stock of said companies at any time and may profit in the event those shares rise in value. For more information on our disclosures, please visit: https://spotlightgrowth.com/disclosures/ The post Earnings Growth Outlook, Potential Rate Cuts Could Finally Boost Small Cap Stocks appeared first on Spotlight Growth. Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Earnings Growth Outlook, Potential Rate Cuts Could Finally Boost Small Cap Stocks By: Spotlight Growth July 12, 2024 at 09:30 AM EDT It has been a tough go for the small-cap-focused Russell 2000 Index (NYSE: IWM). The Index declined 3.3% during the second quarter, while the S&P 500 saw quarterly gains of nearly 4%. Large cap outperformance can largely be attributed to the continued hype around artificial intelligence (AI), cooling inflation, reasonable U.S. economic growth and the impressive resilience of the ‘Magnificent Seven’: Alphabet (NASDAQ: GOOG), Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN), Meta (NASDAQ: META), Microsoft (NASDAQ: MSFT), Nvidia (NASDAQ: NVDA), and Tesla (NASDAQ: TSLA). Source: Royce Investment Partners Despite the heavy focus on larger-cap stocks, small-caps could present a big opportunity for patient long-term investors. On a comparative basis, small-caps are the cheapest relative to large-cap stocks in 25 years. At the same time, the small-cap earnings growth outlook for 2024 is projected to be higher than large-cap stocks. While the long-awaited interest rate cuts by the Federal Reserve could help boost smaller stocks in the short term, big investors are excited about the valuation and earnings growth prospects. Institutional Investors Continue to Hold Bullish Outlook for Small-Cap Stocks In a recent Q&A, Royce Investment Partners’ portfolio manager, Chuck Royce, and co-CIO, Francis Gannon, shared their thoughts on the current state of the small-cap market. In the July 2024 article, Royce and Gannon shared their surprise at the lack of performance of the Russell 2000 Index during Q2 2024. However, the second quarter has not shaken their long-term bullish stance on smaller market cap stocks. Chuck Royce highlighted the historical valuation level of small-caps as a key factor: “…small-caps continue to be far more attractively valued than their larger peers, based on our preferred index valuation metric of EV/EBIT or enterprise value over earnings before interest & taxes.” To investors that may have doubts regarding the long-term prospects of small-caps, Francis Gannon argued: “The Russell 2000 finished June with a near-record number of companies with no earnings, but earnings acceleration is expected to be higher for small-cap companies than for large-cap businesses through the end of 2024.” Source: Royce Investment Partners Mr. Gannon went on to discuss that active managers (stock pickers) have done well with small-caps over the past several years and that a focus on companies showing earnings growth continue to be a promising strategy moving forward. Echoing similar sentiments as Royce, William Muggia, the president of Westfield Capital Management (subadvisor to the Harbor Small Cap Growth Fund), said higher earnings estimates and the historical undervalued state of smaller stocks gives him reasons to be bullish. “I can’t tell you we are at the absolute bottom. But it sure smells like it,” stated Mr. Muggia in a report to Barron’s. ASUR: A Small-Cap with Strong Earnings Growth In the spirit of Royce Investment Partners’ preference for small-caps with a history of growing earnings, Asure Software (NASDAQ: ASUR) is one stock that may be within their wheelhouse. The Texas-based human capital management software solutions provider has continued producing strong top and bottom-line growth since the 2020 pandemic. During Q1 2024, Asure reported total revenue (excluding ERTC) of $30.7 million, which translated to year-over-year growth of 10%. For the full year 2024, management has issued guidance that estimates revenue between $125 million to $129 million on an adjusted EBITDA range of $25 million to $27 million. Considering Asure’s core businesses produced total revenue (excluding ERTC) of $101 million during full-year 2023, the guidance suggests revenues could expand a healthy 26% through 2024. Despite the revenue and earnings growth figures, Asure trades at a discount relative to some of its industry peers. As of March 2024, Asure traded at an enterprise value-to-revenue of 1.3x, compared to an average of 5.7x among Paycor (NASDAQ: PYCR), ADP (NASDAQ: ADP), Paycom (NYSE: PAYC), Paylocity (NASDAQ: PCTY) and Paychex (NASDAQ: PAYX). If Asure were able to reach a similar EV/Revenue valuation of the listed peers above, the implied share price for the small-cap HCM company would range from $20 to $37 per share, showing lots of potential room for growth. Disclaimer: Spotlight Growth is compensated, either directly or via a third party, to provide investor relations services for its clients. Spotlight Growth creates exposure for companies through a customized marketing strategy, including design of promotional material, the drafting and editing of press releases and media placement. All information on featured companies is provided by the companies profiled, or is available from public sources. Spotlight Growth and its employees are not a Registered Investment Advisor, Broker Dealer or a member of any association for other research providers in any jurisdiction whatsoever and we are not qualified to give financial advice. The information contained herein is based on external sources that Spotlight Growth believes to be reliable, but its accuracy is not guaranteed. Spotlight Growth may create reports and content that has been compensated by a company or third-parties, or for purposes of self-marketing. Spotlight Growth was compensated four thousand dollars cash by Asure Software for the creation and dissemination of this content by the company. This material does not represent a solicitation to buy or sell any securities. Certain statements contained herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements with respect to the Company’s plans and objectives, projections, expectations and intentions. These forward-looking statements are based on current expectations, estimates and projections about the Company’s industry, management’s beliefs and certain assumptions made by management. The above communication, the attachments and external Internet links provided are intended for informational purposes only and are not to be interpreted by the recipient as a solicitation to participate in securities offerings. Investments referenced may not be suitable for all investors and may not be permissible in certain jurisdictions. Spotlight Growth and its affiliates, officers, directors, and employees may have bought or sold or may buy or sell shares in the companies discussed herein, which may be acquired prior, during or after the publication of these marketing materials. Spotlight Growth, its affiliates, officers, directors, and employees may sell the stock of said companies at any time and may profit in the event those shares rise in value. For more information on our disclosures, please visit: https://spotlightgrowth.com/disclosures/ The post Earnings Growth Outlook, Potential Rate Cuts Could Finally Boost Small Cap Stocks appeared first on Spotlight Growth.
It has been a tough go for the small-cap-focused Russell 2000 Index (NYSE: IWM). The Index declined 3.3% during the second quarter, while the S&P 500 saw quarterly gains of nearly 4%. Large cap outperformance can largely be attributed to the continued hype around artificial intelligence (AI), cooling inflation, reasonable U.S. economic growth and the impressive resilience of the ‘Magnificent Seven’: Alphabet (NASDAQ: GOOG), Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN), Meta (NASDAQ: META), Microsoft (NASDAQ: MSFT), Nvidia (NASDAQ: NVDA), and Tesla (NASDAQ: TSLA). Source: Royce Investment Partners Despite the heavy focus on larger-cap stocks, small-caps could present a big opportunity for patient long-term investors. On a comparative basis, small-caps are the cheapest relative to large-cap stocks in 25 years. At the same time, the small-cap earnings growth outlook for 2024 is projected to be higher than large-cap stocks. While the long-awaited interest rate cuts by the Federal Reserve could help boost smaller stocks in the short term, big investors are excited about the valuation and earnings growth prospects. Institutional Investors Continue to Hold Bullish Outlook for Small-Cap Stocks In a recent Q&A, Royce Investment Partners’ portfolio manager, Chuck Royce, and co-CIO, Francis Gannon, shared their thoughts on the current state of the small-cap market. In the July 2024 article, Royce and Gannon shared their surprise at the lack of performance of the Russell 2000 Index during Q2 2024. However, the second quarter has not shaken their long-term bullish stance on smaller market cap stocks. Chuck Royce highlighted the historical valuation level of small-caps as a key factor: “…small-caps continue to be far more attractively valued than their larger peers, based on our preferred index valuation metric of EV/EBIT or enterprise value over earnings before interest & taxes.” To investors that may have doubts regarding the long-term prospects of small-caps, Francis Gannon argued: “The Russell 2000 finished June with a near-record number of companies with no earnings, but earnings acceleration is expected to be higher for small-cap companies than for large-cap businesses through the end of 2024.” Source: Royce Investment Partners Mr. Gannon went on to discuss that active managers (stock pickers) have done well with small-caps over the past several years and that a focus on companies showing earnings growth continue to be a promising strategy moving forward. Echoing similar sentiments as Royce, William Muggia, the president of Westfield Capital Management (subadvisor to the Harbor Small Cap Growth Fund), said higher earnings estimates and the historical undervalued state of smaller stocks gives him reasons to be bullish. “I can’t tell you we are at the absolute bottom. But it sure smells like it,” stated Mr. Muggia in a report to Barron’s. ASUR: A Small-Cap with Strong Earnings Growth In the spirit of Royce Investment Partners’ preference for small-caps with a history of growing earnings, Asure Software (NASDAQ: ASUR) is one stock that may be within their wheelhouse. The Texas-based human capital management software solutions provider has continued producing strong top and bottom-line growth since the 2020 pandemic. During Q1 2024, Asure reported total revenue (excluding ERTC) of $30.7 million, which translated to year-over-year growth of 10%. For the full year 2024, management has issued guidance that estimates revenue between $125 million to $129 million on an adjusted EBITDA range of $25 million to $27 million. Considering Asure’s core businesses produced total revenue (excluding ERTC) of $101 million during full-year 2023, the guidance suggests revenues could expand a healthy 26% through 2024. Despite the revenue and earnings growth figures, Asure trades at a discount relative to some of its industry peers. As of March 2024, Asure traded at an enterprise value-to-revenue of 1.3x, compared to an average of 5.7x among Paycor (NASDAQ: PYCR), ADP (NASDAQ: ADP), Paycom (NYSE: PAYC), Paylocity (NASDAQ: PCTY) and Paychex (NASDAQ: PAYX). If Asure were able to reach a similar EV/Revenue valuation of the listed peers above, the implied share price for the small-cap HCM company would range from $20 to $37 per share, showing lots of potential room for growth. Disclaimer: Spotlight Growth is compensated, either directly or via a third party, to provide investor relations services for its clients. Spotlight Growth creates exposure for companies through a customized marketing strategy, including design of promotional material, the drafting and editing of press releases and media placement. All information on featured companies is provided by the companies profiled, or is available from public sources. Spotlight Growth and its employees are not a Registered Investment Advisor, Broker Dealer or a member of any association for other research providers in any jurisdiction whatsoever and we are not qualified to give financial advice. The information contained herein is based on external sources that Spotlight Growth believes to be reliable, but its accuracy is not guaranteed. Spotlight Growth may create reports and content that has been compensated by a company or third-parties, or for purposes of self-marketing. Spotlight Growth was compensated four thousand dollars cash by Asure Software for the creation and dissemination of this content by the company. This material does not represent a solicitation to buy or sell any securities. Certain statements contained herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements with respect to the Company’s plans and objectives, projections, expectations and intentions. These forward-looking statements are based on current expectations, estimates and projections about the Company’s industry, management’s beliefs and certain assumptions made by management. The above communication, the attachments and external Internet links provided are intended for informational purposes only and are not to be interpreted by the recipient as a solicitation to participate in securities offerings. Investments referenced may not be suitable for all investors and may not be permissible in certain jurisdictions. Spotlight Growth and its affiliates, officers, directors, and employees may have bought or sold or may buy or sell shares in the companies discussed herein, which may be acquired prior, during or after the publication of these marketing materials. Spotlight Growth, its affiliates, officers, directors, and employees may sell the stock of said companies at any time and may profit in the event those shares rise in value. For more information on our disclosures, please visit: https://spotlightgrowth.com/disclosures/ The post Earnings Growth Outlook, Potential Rate Cuts Could Finally Boost Small Cap Stocks appeared first on Spotlight Growth.
