As of January 1, 2026, the Russell 2000 Index has a trailing price-to-earnings (P/E) ratio of 32.79, while its forward P/E ratio stands at 25.39. The cyclically adjusted price-to-earnings (CAPE) ratio for the index currently sits at 58.42. During late 2022 and throughout 2023, small-cap companies saw strong earnings growth, primarily driven by notable improvements in the Health Care sector. However, this momentum began to wane in 2024 as higher interest rates and slowing economic growth put pressure on corporate profits. Small-cap earnings began a steady rebound in 2025. Looking ahead, the consensus among analysts points toward significant earnings momentum in 2026.
Note: Our calculations include companies with negative earnings, which leads to a higher P/E ratio compared to figures reported by sources such as FTSE Russell, which exclude firms with negative net income.
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| Date | Russell 2000 Index Price | P/E (TTM) | EPS (TTM) * | Forward P/E | Forward EPS * | CAPE Ratio |
|---|---|---|---|---|---|---|
| 12/31/2025 | 2,481.91 | 32.79 | 210.17 | 25.39 | 116.80 | 58.42 |
| 6/30/2025 | 2,175.04 | 32.36 | 202.14 | 25.23 | 103.00 | 54.19 |
| 12/31/2024 | 2,230.16 | 33.44 | 200.60 | 25.41 | 104.86 | 58.71 |
| 6/30/2024 | 2,047.69 | 27.06 | 227.61 | 23.84 | 102.63 | 57.24 |
| 12/31/2023 | 2,027.07 | 26.72 | 228.18 | 23.74 | 102.02 | 60.46 |
| 6/30/2023 | 1,888.73 | 27.56 | 206.08 | 24.29 | 92.90 | 60.22 |
| 12/31/2022 | 1,761.25 | 51.74 | 102.38 | 21.38 | 98.41 | 59.31 |
| 6/30/2022 | 1,707.99 | 48.59 | 105.71 | 18.29 | 111.55 | 58.97 |
* The table presents both trailing and forecasted Earnings Per Share (EPS), with values indexed to a base of 100 as of January 1, 2022. EPS (TTM) reflects the aggregate earnings of the Russell 2000 index stocks for the past 12 months. EPS (Forward) is the forecasted (analyst consensus) earnings per share for the next 12 months.
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Earnings Growth of Russell 2000 Companies
Small-cap companies were hit particularly hard during the COVID-19 pandemic, as many lacked the financial resilience of their larger counterparts. In 2020, the combined earnings of Russell 2000 companies turned negative, marking one of the most challenging years in the index’s history. However, as the economy reopened and demand rebounded, corporate earnings experienced a strong recovery in 2021.
By 2022, the pace of earnings growth had started to slow, influenced by rising inflation, interest rate hikes by the Federal Reserve, and supply chain disruptions. Despite these challenges, small-cap corporate profits saw a strong finish to the year. The momentum continued into 2023, with earnings experiencing a robust rebound, driven in large part by significant improvements in the Health Care sector. Other sectors, such as Consumer Discretionary and Industrials, also contributed to the growth, benefiting from economic resilience and increased consumer spending.
However, earnings momentum began to falter again in 2024. Higher borrowing costs, economic uncertainty, and a shift in investor preference toward large-cap stocks weighed on small-cap profitability. In contrast, large-cap companies—especially those in the technology sector— have demonstrated much stronger earnings growth, primarily fueled by the exceptional profitability of the Magnificent Seven stocks (Apple, Microsoft, Amazon, Nvidia, Alphabet, Tesla, & Meta). Their dominance has widened the performance gap between small-cap and large-cap stocks.
Following a solid performance in 2025 where earnings began to normalize, the outlook for small-caps in 2026 is very positive. Analysts anticipate a strong bounce in earnings, driven by improved domestic economic conditions and increased capital expenditure.
Russell 2000 Index
The Russell 2000 Index is a benchmark that measures the performance of approximately 2,000 small-cap companies within the U.S. equity market. This index offers insights into the performance of smaller companies, often reflecting the economic prospects of domestically focused businesses.