S&P 500 vs. Fortune 500: An Overview
The Fortune 500 and the S&P 500 are different lists and measures of companies in the United States, and they are compiled by two different entities. The Fortune 500 is an annual list of the 500 largest companies, compiled under the auspices of Fortune magazine, 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 (in addition to their compilers) is that one includes private companies, while the other only includes publicly traded large-cap companies. But they do overlap, and each is considered a prestigious roster to be included on.
- The Fortune 500 and the S&P 500 are two prestigious measures of companies in the United States, and they are compiled by two different entities.
- The Fortune 500 is an annual list of the 500 largest companies, compiled by Fortune magazine, 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.
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 the 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 many funds use to shape their portfolios and many investors and analysts use to gauge the health of a stock, a fund, or another asset. The S&P 500 index is regarded as one of the best gauges of prominent American equities' performance, and by extension, that of the stock market overall.
The Fortune 500 is an annual list of the 500 largest companies in the U.S. using the most recent figures for revenues. Compiled and managed by Fortune magazine since 1955, it includes both public and private companies.
Ascending to the ranks of The Fortune 500 is an honor; in fact, calling a firm "Fortune 500 company" indicates it ranks among the biggest and richest, the crème de la crème of Corporate America. While not trying to represent U.S. industry or the U.S. economy, The Fortune 500 often provides a revealing snapshot of both. When many companies from a certain field drop off the list, it may signal weakness in that particular sector, for example. Tracking the members on the list over time, you could note the decline of heavy manufacturing and the rise of high-tech and service firms among the U.S. corporate giants.
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 cooperative, and it 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, length of time publicly traded, and stock exchange. To be added to the index, a company must satisfy the following liquidity-based size requirements:
- A market capitalization greater than or equal to $11.8 billion
- A public float of at least 10% of its shares outstanding
- Most recent quarter's earnings and the sum of its trailing four consecutive quarters' earnings must be positive
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).