S&P 500 vs. Fortune 500: An Overview

The Fortune 500 and the S&P 500 are different measures of companies in the United States, and they are compiled by two different companies. The Fortune 500 is an annual list of the 500 largest companies using the most recent revenue figures and includes public and private companies. The S&P 500 is an index of 500 public companies that are selected by the S&P Index Committee. The main difference between the two lists is that one includes private companies, while the other only includes publicly traded large-cap companies.

S&P 500

The S&P 500 is an index composed of 500 large-cap stocks that represent the leading industries of the U.S. economy. The S&P Index Committee chooses which 500 companies should be placed in the index by analyzing liquidity, industry and market capitalization of publicly traded companies. Large-cap companies are those that have a market capitalization of over $10 billion. The S&P 500 measures the overall risk, return and performance of the large-cap equities market. It is the main benchmark that investors and practitioners use to gauge the health of U.S. large-cap stocks.

Fortune 500

The Fortune 500 is an annual list of the 500 largest companies in the U.S. using the most recent figures for revenues. It is compiled and managed by Fortune magazine and includes both public and private companies. The Fortune 500 can be used to gauge the health of the overall U.S. economy. When many companies of a sector are removed from the list, it may signal weakness in that particular sector.

Key Takeaways

  • The Fortune 500 and the S&P 500 are measures of companies in the United States, and they are compiled by two different companies.
  • The Fortune 500 is an annual list of the 500 largest companies using the most recent revenue figures and includes public and private companies.
  • The S&P 500 is an index of 500 public companies that are selected by the S&P Index Committee.
  • The main difference between the two lists is that one includes private companies, while the other only includes publicly traded large-cap companies.

Key Differences

Fortune magazine intends its list to be a ranking of American companies as opposed to companies doing business in America. This distinction is noted in their selection criteria. An American company, as defined by the Fortune 500, is incorporated in the U.S. and operating in the U.S. The company can be public, private or cooperatives, and they must file financial statements with a government agency to qualify. Companies that don't file reports with the government are excluded. Also ineligible are U.S. companies that are consolidated into another company, either domestic or foreign, for financial reporting.

By contrast, the S&P 500 committee assesses a company's merit for inclusion, based on eight primary criteria: market capitalization, liquidity, domicile, public float, sector classification, financial viability, and length of time publicly traded and stock exchange. To be added to the index, a company must satisfy the following liquidity-based size requirements:

  1. Market capitalization must be greater than or equal to $8.2 billion USD
  2. Annual dollar value traded to float-adjusted market capitalization is greater than 1.0
  3. Minimum monthly trading volume of 250,000 shares in each of the six months leading up to the evaluation date

The selection committee wants the S&P 500 to be representative of the industries in the American economy. The securities must be publicly listed on either the New York Stock Exchange (including NYSE Arca and NYSE MKT) or NASDAQ (NASDAQ Global Select Market, NASDAQ Select Market or the NASDAQ Capital Market).