The Standard & Poor’s 1500 (S&P 1500) is an index. An index is a measure of a particular market, in this case the equities market. An index's goal is to mirror a market by selecting a segment of the businesses it contains. The S&P 1500 combines the Standard & Poor’s 500 (S&P 500), the Standard & Poor’s Midcap 400 (S&P 400) and the Standard & Poor’s SmallCap 600 (S&P 600) indices into one. The S&P 500, S&P 400 and S&P 600 are used to track large-cap U.S. equities, midsized companies and the small-cap segment, respectively. Together, these three indices represent approximately 90% of the market economy.
The goal of the S&P 1500 is to represent a broad cross-section of the market, such as the Wilshire 5000 and the NASDAQ Composite Index. This is in contrast to the Dow Jones Industrial Average, which includes only 30 of the nation’s largest stocks. Analysts using the S&P 1500 are looking at an overview of the general market, whereas analysts using the S&P 500 are looking at a slice of the market.
In addition to reviewing the market performance of the S&P 1500, investors can analyze business fundamentals to see if they align with market trends and their own portfolio. In this way, analysts use the S&P 1500 as a benchmark to gauge portfolio performance. One of the most important measures of performance is revenue.
Revenue Trends by Country
From 2014 to 2015, the revenue of the companies in the S&P 1500 was $12,666.4 billion. The United States comprised 69.5% of those revenues, more than any other country. The United States has been on a three-year growth trend, growing 2.3% year-over-year (YOY). While mainland China brings in only 6.8% of revenues, it is growing nearly three times faster than the United States. Following mainland China, the United Kingdom comprises 2.8% of revenue, followed by Canada at 2.2% and Japan at 2.1%. While YOY revenue exposure has increased in the S&P 1500 for businesses in the United States, mainland China and the United Kingdom, it is down for Canada, Japan, Germany, Brazil and France. The largest YOY drop in revenue was from businesses based in Brazil, followed by those in Canada and Japan.
Revenue Trends by Region
Revenue trends by region favor the Americas with 75.5% of revenue, followed by Europe at 11.3% and Asia/Pacific at 10.8%. The Americas region grew from bringing in 74.2% of the revenue in 2015 to 75.2% in 2016. Revenue exposure over the same period from European businesses declined from 12.1 to 11.2%, meanwhile Asia/Pacific remained flat.
Revenue Trends by Economy Type
Size matters when analyzing revenue contribution, but income matters more. Over 80% of revenue exposure in the S&P 1500 is concentrated in developed nations. These are nations with deep investments in economic development, characterized by higher per capita income levels. Countries with low investments in economic development tend to have lower per capita income levels, and are referred to as emerging or frontier economies. In 2015, emerging economies represented 11.1% of total revenues in the S&P 1500. That percentage dropped to 10.9% in 2016.
The S&P 1500 is an index. It is used as a broad survey of market performance. Comprised of both small and large companies in every industry, portfolio managers like to use it as a gauge to judge portfolio performance. It can also be used as a way to compare fundamentals such as revenue against single stock picks. If a company receives more than 70% of its revenue from companies outside of the United States, it is considered an anomaly, which is a good thing as long as revenue trends in that region are strong and growing. Likewise, if a company receives the bulk of its revenue from a country with declining revenue trends, such as Brazil, the company may have a difficult time in 2016, as revenues from S&P 1500 companies in Brazil have declined significantly.