JEF SMID Strategy—Earnings Season Started, Very Modest Growth Expected Down Cap

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JEF SMID Strategy—Earnings Season Started, Very Modest Growth Expected Down Cap

USA | Equity Strategy EquityJulyResearch17, 2026

STRATEGY NOTEJEF SMID Strategy—Earnings Season Started,

Very Modest Growth Expected Down Cap

Q2 reporting season kicked off with strong results from Large Banks, not much '26s growth rate has been rising, something

we don't normally see this time of year, more

happening elsewhere. Street looking for subdued earnings growth for Small so for Large

Small (LHS) Mid (LHS) Large (RHS)in Q2 with estimated growth below 4% thanks to weaker growth in Tech due 2026s earnings growth (In %) 24.0

20.0to tough compares. However, earnings growth is expected to ramp up over 22.019.0 22.0

course of year, get closer to Large with hope that it exceeds by Q4. Earnings 16.0 18.016.0

14.0

13.0

12.0broadening out good for themes like "Breaking Momentum", Fading High Beta 10.0 10.0

\Sales Growth. .Source:27-Jun FactSet;11-Aug 25-SepStandard9-Nov &24-DecPoor's;7-FebJefferies24-Mar 8-May 22-Jun

Can Q2 reporting season come close to Q1? Not for Small according to analysts: One of the Expectations are running high for Q4 earnings

growth; Sweet 16's growth is impressive

key drivers behind the solid performance thus far this year, especially by Small Caps, has been 2Q26P 3Q26P 4Q26P

the strength in earnings and the trend in revisions. We do see a subdued growth rate anticipated 40.0 Earnings Growth (in %)

for Small for the Q2 reporting season at less than 4%, mainly due to weaker numbers by Tech. 30.0 32.4 34.0

We are more optimistic, as the economy has been resilient and the difference between actual and 24.8 25.0 20.0 18.7 16.3 19.6 21.1 21.6 17.0 21.3 20.0

consensus has been running above average. We think Small will post another double-digit growth

10.3 11.2