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The public middle market outshines the big guys

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The public middle market outshines the big guys

Russell 2000 has increased 33% in 2013, and 39% during the last 12 months.

Public middle market companies are exhibiting extraordinary growth in valuations in 2013 and over the last 12 months, suggesting high expectations for growth in coming quarters.

The “small-cap” index, which is largely comprised of publicly-traded midmarket companies, has risen 33.04% since the beginning of the year, and 39.5% over the last 12 months.  This compares with 21.21% and 21.92%, respectively, for the Dow Jones Industrial Average.

Such remarkable performance indicates not only strong earnings during this period, but also strong optimism for growth among midmarket firms.

"The PCEO Middle Market Average, which averages the results of the most recent surveys of middle market executives, indicates that 59% of midmarket companies expect revenue growth in excess of 5% over the next 12 months."

Optimism has been reflected in various surveys of midmarket executives over the last several quarters undertaken by organizations like Deloitte, KPMG, CIT, PwC, Keybank, and others.  These surveys consistently indicate optimism for the future among both private and public middle market companies, tempered somewhat by the uncertainty of governmental dysfunction and concerns over excessive regulation, higher taxes and ObamaCare.

In the most recent of such surveys, issued by middle market finance provider CIT, fully 61% of middle market companies expected either moderate or high growth in the coming year.  The PCEO Middle Market AverageTM, which averages the results of the most recent surveys of middle market executives, indicates that 59% of midmarket companies expect revenue growth in excess of 5% over the next 12 months. In addition, half expect to increase hiring during that period – another sign of optimism for the future.

“Middle market companies have experienced some positive momentum over the past year,” says Brian Hughes, National Mid Market Group Leader for KPMG.  “Business confidence is growing, and executives predict an improved U.S. economy over the next year. The vast majority say their companies have increased revenue over the past year, and they expect to see continued revenue growth. Overall, these companies are gaining a sense of stability, and they are ready to invest.”

While obstacles remain – primarily of the government-induced variety – it appears that midmarket companies are ready to expand.  And not a moment too soon.

 

 

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