- Should You Hold TTMI at 41.1X P/E? 3 Reasons Despite the Premium
May 15, 2026
TTM Technologies TTMI shares are overvalued, as suggested by a Value Score of D. The stock is trading at a premium with a forward 12-month Price/Earnings (P/E) of 41.09X compared with the Zacks Electronics - Miscellaneous Components industry’s 28.22 and Zacks Computer and Technology sector's 25.87X. TTMI is valued above its peers, Amphenol Corporation APH, Sanmina Corporation SANM and TE Connectivity TEL, which trade at 25.45X, 19.63X and 17.04X, respectively.
The premium is supported by accelerating data center and networking revenue, record backlog levels and expanding manufacturing capacity tied to rising AI compute demand, though a meaningful portion of the near-term growth narrative already appears priced in.
TTMI’s P/E F12M RatioZacks Investment Research
Image Source: Zacks Investment Research
On a year-to-date basis, TTMI shares have surged 149.1%, outpacing the Zacks sub-industry's 7.6% decline and the broader sector's 17.3% advance. Among peers, Sanmina Corporation has gained 61.3% while TE Connectivity and Amphenol Corporation have declined 9.1% and 4.4%, respectively, year to date.
TTMI's outperformance reflects growing market recognition of its differentiated positioning in high-complexity printed circuit boards serving AI data center buildouts and defense modernization programs.
TTMI’s YTD PerformanceZacks Investment Research
Image Source: Zacks Investment Research
So how should investors approach TTMI at this stage? Let's take a closer look.
TTMI Benefits From AI Buildout and Defense Modernization
TTM Technologies is well-positioned within two of the most structurally supported demand cycles in electronics manufacturing, namely AI data center infrastructure and defense modernization. The company's advanced printed circuit boards, capable of reaching layer counts up to 140, are becoming central to next-generation AI system architectures as hyperscalers scale compute capacity. With 80% of revenues tied to these two verticals, TTMI's revenue mix is structurally aligned with where capital deployment is accelerating most visibly.
On the defense side, recent program bookings spanning advanced radar systems and a confirmed order tied to the Golden Dome initiative reflect deepening program alignment that extends well beyond near-term budget cycles. The commercial book-to-bill of 1.65 in the first quarter of 2026 indicates demand is running well ahead of current shipments, with the 90-day backlog expanding 52% year over year to $787 million, providing concrete near-term revenue support.
The Zacks Consensus Estimate for 2026 revenues is pegged at $3.83 billion, up 31.65% year over year. The consensus mark for EPS is pegged at $3.60 and has been revised 11.11% upward over the past 30 days, indicating 46.34% growth year over year, suggesting the earnings trajectory remains firmly positive as the company's stated goal to grow revenues 15% to 20% annually over the next three years and double earnings from 2025 to 2027 continues to track ahead of plan.
Story Continues
TTM Technologies, Inc. Price and ConsensusTTM Technologies, Inc. Price and Consensus
TTM Technologies, Inc. price-consensus-chart | TTM Technologies, Inc. Quote
Expanding Capacity Expected to Drive TTMI Margins
TTM Technologies is in the midst of an aggressive capacity expansion cycle that is beginning to translate into tangible margin improvement. The Penang facility in Malaysia, the company's anchor for data center and networking production in Asia, has seen yields improve toward 70% to 80%, approaching a breakeven threshold expected to reduce the current drag on consolidated margins through the second half of 2026.
The Eau Claire facility in Wisconsin follows the same anchor customer model that drove Penang's ramp. With 750,000 square feet across three flexible modules serving both commercial and defense end markets, it has the potential to become a meaningful domestic revenue contributor as onshore manufacturing demand grows, though its margin impact is expected to be more visible in 2027 and beyond.
Capital expenditure guidance for 2026 has been raised to $300 to $320 million from $240 to $260 million, indicating accelerated equipment procurement ahead of anticipated demand. This investment is showing early returns, with operating margins expanding 230 basis points year over year to 12.8% in the first quarter of 2026, driven by higher volumes and a favorable mix shift toward higher complexity boards. As Penang moves toward breakeven and the broader capacity base scales, operating leverage on a higher revenue base is expected to drive further margin expansion through 2027.
TTMI's Cash Outflow Warrants Caution
With a free cash flow of negative $85 million recorded in the first quarter of 2026, reflecting capital expenditures of $107 million, cash consumption is expected to remain elevated through the near term as the global capacity build progresses. CapEx guidance has been raised to $300 to $320 million for 2026, and with the Penang facility yet to reach breakeven, further pressure on cash generation is anticipated before new facilities approach productive capacity.
Should demand moderate or facility ramps take longer than anticipated, incremental demand could be absorbed by established peers, Amphenol Corporation, Sanmina Corporation and TE Connectivity, potentially weighing on TTMI's ability to sustain its current growth trajectory.
Conclusion
TTM Technologies remains well-positioned within AI infrastructure and defense modernization, supported by a record backlog and a capacity expansion program aligned with durable demand tailwinds. However, elevated cash consumption, Penang's below-breakeven status and execution risks tied to accelerated CapEx limit near-term upside visibility following the stock's sharp year-to-date rally.
TTMI currently carries a Zacks Rank #3 (Hold) and a Growth Score of A, suggesting that existing investors may benefit from maintaining their positions, while new investors could benefit from waiting for a more favorable entry point. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Amphenol Corporation (APH) : Free Stock Analysis Report
TE Connectivity Ltd. (TEL) : Free Stock Analysis Report
TTM Technologies, Inc. (TTMI) : Free Stock Analysis Report
Sanmina Corporation (SANM) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
View Comments
- Arista vs. Jabil: Which AI-Driven Tech Stock Looks Stronger Now?
May 14, 2026
Arista Networks, Inc. ANET and Jabil Inc. JBL are two leading players in the technology manufacturing industry. Arista offers one of the broadest product lines of data center and campus Ethernet switches and routers in the industry. It provides routing and switching platforms with industry-leading capacity, low latency, port density and power efficiency.
Jabil is one of the largest global suppliers of electronics manufacturing services (EMS) solutions. The company offers electronics design, production, product management and after-market services to customers in the aerospace, automotive, computing, consumer, defense, industrial, instrumentation, medical, networking, peripherals, storage and telecommunications industries.
With domain-specific expertise in core areas, both Arista and Jabil are strategically positioned in the tech-adjacent manufacturing landscape and have the means to cater to the evolving demands of business enterprises and artificial intelligence/machine learning (AI/ML) technology. Let us delve a little deeper into the companies’ competitive dynamics to understand which of the two is relatively better placed in the industry.
The Case for ANET
Arista holds a leadership position in 100-gigabit Ethernet switches and is increasingly gaining market traction in 200- and 400-gigabit high-performance switching products. The Arista 2.0 strategy is resonating well with customers, as its modern networking platforms are foundational for the transformation from silos to data centers. The company boasts a comprehensive portfolio with the right network architecture for client-to-campus data center cloud and AI networking, backed by three guiding principles. These include best-in-class, highly proactive products with resilience, zero-touch automation and telemetry with predictive client-to-cloud one-click operations with granular visibility and prescriptive insights for deeper AI algorithms.
The Arista 2.0 strategy includes three components that are likely to drive growth over the next few years. The first component involves focused plans to invest in core businesses by rolling out new solutions and improved AI offerings. Secondly, Arista aims to emphasize more on software-as-a-service for improved revenue visibility. Last but not least, the company plans to enter adjacent markets to target a broader customer base.
Arista remains plagued by high operating costs. Total operating expenses in the first quarter of 2026 increased around 24.4% to $519 million, owing to a rise in headcount, new product introduction costs and higher variable compensation expenditures. Moreover, the redesigning of products and their supply chain mechanism has eroded margins. Although the company is witnessing increased demand, there are lingering supply bottlenecks for advanced products. Therefore, Arista is increasing orders for these components and trying to build up inventory, which is blocking working capital.
Story Continues
The Case for JBL
With a presence across 100 locations in 30 countries, Jabil is likely to gain from secular growth drivers with strong margins and cash flow dynamics. Its unmatched end-market experience, technical and design capabilities, manufacturing know-how, supply-chain insights and global product management expertise have put it in good stead.
Management’s focus on improving working capital management and integrating sophisticated AI and ML capabilities to enhance the efficiency of its internal processes is a major tailwind. Jabil’s top line is expected to benefit from strength in AI data center infrastructure, capital equipment and warehouse automation markets. The company is likely to gain from the rapid adoption of 5G wireless and cloud computing in the long run. It is benefiting from solid demand in key end markets, together with excellent operational execution and skillful management of supply-chain dynamics.
However, Jabil operates in a highly competitive environment, facing competition from both domestic and international electronic manufacturers, manufacturing service providers and designers like Sanmina Corporation SANM. The tense geopolitical situation between the United States and China, and the Iran war remain headwinds with shipping restrictions in the Strait of Hormuz. Against the backdrop of this global uncertainty, low demand in some consumer-centric markets is negatively impacting its margins.
How Do Estimates Compare for ANET & JBL?
The Zacks Consensus Estimate for Arista’s 2026 sales and EPS indicates year-over-year increase of 28.2% and 21.8%, respectively. The EPS estimates for ANET have increased 3.1% over the past 60 days.Zacks Investment Research
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Jabil’s fiscal 2026 sales and EPS implies year-over-year growth of 14.1% and 26.1%, respectively. The EPS estimates have trended up 5.8% over the past 60 days.Zacks Investment Research
Image Source: Zacks Investment Research
Price Performance & Valuation of ANET & JBL
Over the past year, Arista has surged 46.4% against the industry’s decline of 15.3%. Jabil has gained 113.9% over the same period.Zacks Investment Research
Image Source: Zacks Investment Research
Jabil looks more attractive than Arista from a valuation standpoint. Going by the price/earnings ratio, JBL shares currently trade at 25.88 forward earnings, lower than 36.81 for ANET.Zacks Investment Research
Image Source: Zacks Investment Research
ANET or JBL: Which is a Better Pick?
Both Arista and Jabil carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Both Arista and Jabil expect sales and profits to improve in 2026, although the former’s growth expectations exceed those of the latter. Jabil boasts a better price performance, and its valuation metrics appear comparatively more attractive. Jabil offers a cheaper, more diversified way to participate in AI hardware demand with potentially lower downside risk. Consequently, JBL seems to be a better investment option at the moment.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Jabil, Inc. (JBL) : Free Stock Analysis Report
Sanmina Corporation (SANM) : Free Stock Analysis Report
Arista Networks, Inc. (ANET) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
View Comments
- 3 AI-Powered EMS Stocks to Buy for 2026 Despite Year-to-Date Rally
May 14, 2026
The electronics manufacturing services (EMS) space primarily consists of companies that provide design, engineering and manufacturing services to electronics original equipment manufacturers (OEMs). The Zacks defined Electronics - Manufacturing Services industry is currently in the top 9% of the Zacks Industry Rank.
Here we recommend three global EMS leaders that are strategically positioned in the EMS landscape and have the ability to cater to the evolving AI (artificial intelligence) demands of business enterprises. These three companies are: Celestica Inc. CLS, Jabil Inc. JBL and Sanmina Corp. SANM.
These three are high-flying stocks on Wall Street year to date. Despite this stiff northward journey, they still have more fireworks in store for 2026. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our three picks year to date.Zacks Investment Research
Image Source: Zacks Investment Research
Celestica Inc.
Zacks Rank #2 Celestica is one of the largest EMS companies in the world, serving OEMs, cloud-based and other service providers, and business enterprises across several industries.
Increasing Focus on High-Value Markets
CLS’ focus on product diversification and increasing its presence in high-value markets is positive. Its strong research and development foundations allow it to produce high-volume electronic products and highly complex technology infrastructure products for a wide range of industries.
CLS is benefiting from healthy demand trends in the Connectivity & Cloud Solutions segment. The growth is primarily backed by CLS’ strength in Hyperscaler Portfolio Solutions networking business and optical programs, especially increasing demand for 800G and 400G network switches.
The growing proliferation of AI-based applications and generative AI tools is fueling solid AI investments across the technology ecosystem. This, in turn, is driving demand for CLS’ enterprise-level data communications and information processing infrastructure products, such as routers, switches, data center interconnects, edge solutions and servers and storage-related products. To further capitalize on this trend, Celestica is steadily expanding its offerings through innovation and strategic collaboration.
Strong Guidance
For the second quarter of 2026, Celestica expects revenues in the range of $4.15 billion to $4.45 billion. Non-GAAP earnings per share are expected in the band of $2.14-$2.34. Management expects non-GAAP operating margin to be about 8%.
Story Continues
CLS anticipates 2026 revenues to be approximately $19 billion, up from the previous projection of $17 billion. Non-GAAP operating margin is expected to be 8.1%. Non-GAAP adjusted earnings are expected to be $10.15 per share, up from the previous view of $8.75 per share. Non-GAAP free cash flow is estimated to be $500 million.
Solid Estimate Revisions
Celestica has an expected revenue and earnings growth rate of 53.8% and 67.9%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 15.1% in the last 30 days. It has a long-term (3 to 5 years) growth rate of 45.3%, significantly higher than the S&P 500 Index’s current growth rate of 16.4%.Zacks Investment Research
Image Source: Zacks Investment Research
Jabil Inc.
Zacks Rank #2 Jabil is one of the largest global suppliers of EMS solutions. JBL offers electronics design, production, product management and after-market services to customers in more than a dozen industry verticals.
JBL has been benefiting immensely from healthy momentum in capital equipment, AI-powered data center infrastructure, cloud, and digital commerce business verticals. Its focus on end-market and product diversification is a key catalyst.
Effective Product Diversifications
JBL’s focus on end-market and product diversification is a key catalyst. JBL’s top-line is expected to benefit from strength in AI data center infrastructure, capital equipment and warehouse automation markets.
JBL is set to invest heavily over the next several years to expand its manufacturing capabilities for the AI data center vertical. This will significantly boost the company’s position in the AI hardware supply chain.
JBL’s unmatched end-market experience, technical and design capabilities, manufacturing know-how, supply-chain insights and global product management expertise have put it in good standing.
Massive application of generative AI is set to drastically increase the efficiency of JBL’s automated optical inspection machines for the automation industry. A large-scale portfolio of business sectors offers JBL a high degree of resiliency during times of macroeconomic and geopolitical disruption.
An extensive global footprint is further strengthened by a centralized procurement process, which, coupled with a single Enterprise Resource Planning system, aids customers with end-to-end supply-chain visibility. A worldwide connected factory network enables JBL to scale up production per the evolving market dynamics.
Jabil is expected to gain from the rapid adoption of 5G wireless and cloud computing in the long run. The company is benefiting from solid demand in key end markets together with excellent operational execution and skillful management of supply-chain dynamics.
Strong Guidance
Jabil expects AI data center infrastructure, healthcare and advanced warehouse and retail automation to be the major growth drivers in 2026. For fiscal 2026, revenues are now projected at $34 billion, up from the prior estimate of $32.4 billion. Non-GAAP earnings per share are expected to be $12.25, up from the prior estimate of $11.55. The company is expected to generate more than $1.3 billion in adjusted free cash flow.
Solid Estimate Revisions
Jabil has an expected revenue and earnings growth rate of 14.2% and 26.2%, respectively, for the current year (ending August 2026). The Zacks Consensus Estimate for the current year’s earnings has improved 5.8% in the last 60 days. It has a long-term growth rate of 17.1%, higher than the S&P 500 Index’s current growth rate of 16.4%.Zacks Investment Research
Image Source: Zacks Investment Research
Sanmina Corp.
Zacks Rank #1 Sanmina focuses on engineering and fabricating complex components and on providing complete end-to-end supply chain solutions to Original Equipment Manufacturers across various end markets, including industrial, medical, defense and aerospace, automotive, communications and cloud infrastructure.
Impressive Demand in AI End Markets
SANM’s diverse portfolio and end-to-end product lifecycle management allow customers to rely on a single partner and reduce complexity in operations. Strategic expansion into high-growth industries backed by its strong global network and deep expertise in advanced electronics manufacturing, acts as a tailwind.
SANM aims to strengthen technology leadership by working closely with customers on future manufacturing requirements and aligning its engineering and software investments to those needs. SANM’s 42Q connected manufacturing platform is designed to integrate data across factories and suppliers, creating a more current operational view that can shorten decision cycles and improve visibility across distributed manufacturing.
SANM is also using the ZT Systems integration to expand its addressable market beyond full systems builds by layering in Sanmina capabilities such as sub-assemblies and related CPS technologies over time. In communications networks and cloud and AI infrastructure, the company is witnessing program activity, with management noting continued bookings and new program wins and pointing to a pipeline that extends into 2027 and 2028.
Strong Guidance
For the third quarter of fiscal 2026, SANM guided revenues of $3.2-$3.5 billion and earnings of $2.55-$2.85 per share, with non-GAAP operating margin between 6.4% and 6.9%.For fiscal 2026, Sanmina expects revenues of $13.7-$14.3 billion and earnings of $10.75-$11.35 per share.
Management also reiterated that ZT Systems is expected to land well within the $5 billion to $6 billion annualized revenue framework previously discussed, positioning the company for a larger revenue base heading into fiscal 2027.
Solid Estimate Revisions
Sanmina has an expected revenue and earnings growth rate of 75.5% and 85.8%, respectively, for the current year (ending September 2026). The Zacks Consensus Estimate for the current year’s earnings has improved 10.1% in the last 60 days. It has a long-term growth rate of 27.8%, well above the S&P 500 Index’s current growth rate of 16.4%.Zacks Investment Research
Image Source: Zacks Investment Research
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Jabil, Inc. (JBL) : Free Stock Analysis Report
Celestica, Inc. (CLS) : Free Stock Analysis Report
Sanmina Corporation (SANM) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
View Comments
- 3 AI-Powered EMS Stocks to Buy for 2026 Despite Year-to-Date Rally
May 14, 2026 · zacks.com
AI-driven demand and strong 2026 guidance position CLS, JBL and SANM for further gains after YTD rallies.
- TTMI's Penang Ramp Advances: Can Margin Expansion Continue Ahead?
May 13, 2026
TTM Technologies' TTMI Penang facility ramp is becoming an important operational lever as the company works to improve manufacturing efficiency and sustain margin expansion. The Malaysia-based site supports advanced printed circuit board production, particularly for higher-complexity applications, making execution at the facility increasingly relevant to TTMI's profitability profile.
The ramp appears to be progressing steadily following earlier startup inefficiencies that weighed on margins. During the first quarter of 2026, TTMI highlighted meaningful improvements in manufacturing yields for key programs, with yields climbing from roughly 40% in prior periods to a range of 70% to 80%, indicating that production execution and process stability are improving as volumes scale. The facility is moving closer toward breakeven levels, reducing the financial pressure typically associated with newly expanded manufacturing capacity.
Improving utilization at Penang could become increasingly important for TTMI's margin trajectory. New advanced manufacturing facilities generally carry elevated operating costs during the early stages of production ramp-up due to lower absorption rates and qualification-related expenses. As production efficiency improves, fixed costs are spread across higher output volumes, creating a more favorable margin structure. Notably, the full-year margin headwind from Penang has already moderated from 160 basis points to around 80 basis points.
The operational progress has been visible in the first-quarter results. TTMI's non-GAAP operating margin expanded 230 basis points year over year to 12.8%, supported partly by improved operating leverage and a better product mix, with non-GAAP gross margin also widening 150 basis points to 22.3%.
If utilization levels continue improving and production yields remain stable, the Penang ramp could transition from a margin headwind into a structural margin contributor.
TTMI Faces Stiff Competition
TTM Technologies faces competition from Sanmina Corporation SANM and Jabil JBL in scaling advanced manufacturing capacity for AI and networking infrastructure demand. Sanmina Corporation continues expanding cloud and networking manufacturing programs across its global footprint, while the company also benefits from diversified electronics manufacturing exposure. However, Sanmina Corporation remains broadly positioned across multiple end markets rather than being heavily concentrated in advanced PCB production. Jabil continues investing in intelligent infrastructure manufacturing and facility optimization initiatives. Jabil is focused on improving utilization and operating efficiency across its production footprint, while Jabil maintains broader exposure across consumer and industrial programs. In contrast, TTMI’s Penang ramp is more directly tied to higher-complexity PCB manufacturing and advanced interconnect production.
Story Continues
TTMI’s Share Price Performance, Valuation & Estimate
TTM Technologies shares have surged 136.8% year to date, while the Zacks Electronic Miscellaneous Components industry has declined 9.1% and the Zacks Computer and Technology sector has returned 16.5%.
TTMI Stock's PerformanceZacks Investment Research
Image Source: Zacks Investment Research
From a valuation standpoint, TTM Technologies stock is currently trading at a forward 12-month price/sales ratio of 4.18X compared with the industry’s 4.1X.
TTMI’s ValuationZacks Investment Research
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for TTMI’s 2026 EPS is pegged at $3.6, up by 11.11% over the past 30 days and indicating 46.34% growth over the figure reported a year ago.
TTM Technologies, Inc. Price and ConsensusTTM Technologies, Inc. Price and Consensus
TTM Technologies, Inc. price-consensus-chart | TTM Technologies, Inc. Quote
TTMI currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Jabil, Inc. (JBL) : Free Stock Analysis Report
TTM Technologies, Inc. (TTMI) : Free Stock Analysis Report
Sanmina Corporation (SANM) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
View Comments
- Marvell Stock Climbs After AMD Reveals Surprise Stake
May 13, 2026
This article first appeared on GuruFocus.
Marvell Technology (NASDAQ:MRVL) shares rose about 3% on Wednesday after Advanced Micro Devices (NASDAQ:AMD) disclosed a stake in the chipmaker in a quarterly filing, giving investors a new data point on portfolio moves across the semiconductor group.
AMD reported owning 65,516 Marvell Technology shares at the end of March, with the position valued at about $6.5 million in the filing. Based on Marvell Technology's latest closing price, the holding would now be worth roughly $10.7 million.
Warning! GuruFocus has detected 9 Warning Signs with MRVL. Is MRVL fairly valued? Test your thesis with our free DCF calculator.
The filing also showed AMD kept existing positions in Sanmina (SANM), with 1.15 million shares, and ABSCI (ABSI), where it held 5.71 million shares. Those details suggest AMD continued to hold a mix of industrial and biotechnology names alongside its chip investments.
AMD also added a new position in Xanadu Quantum Technologies, valued at about $1.5 million. For Marvell Technology, the disclosure may reinforce investor attention on the stock as semiconductor holdings remain in focus.
View Comments
- Small-Cap ETF Showdown: Schwab's SCHA vs. iShares' IJR
May 11, 2026
The Schwab U.S. Small-Cap ETF(NYSEMKT:SCHA) offers lower costs and broader market coverage, while the iShares Core S&P Small-Cap ETF(NYSEMKT:IJR) provides a more concentrated portfolio with higher liquidity.
Both funds serve as low-cost gateways to the smallest corners of the domestic equity market. While they share similar sector exposures, the primary difference lies in their index strategies.
The Schwab fund casts a wide net across nearly the entire small-cap universe, while the iShares fund focuses on a more selective set of companies that must meet S&P's specific financial viability standards. This distinction affects how each portfolio reacts to market cycles.
Snapshot (cost & size)
Metric SCHA IJR Issuer Schwab iShares Expense ratio 0.04% 0.06% 1-yr return (as of May 7, 2026) 44.0% 37.1% Dividend yield 1.0% 1.2% Beta 1.10 1.04 AUM $22.4 billion $102.9 billion
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The Schwab fund remains one of the most affordable options in the category with a 0.04% expense ratio, which minimizes the drag on long-term returns. Although the iShares fund costs slightly more at 0.06%, it may appeal to income-focused investors because it currently provides a higher trailing-12-month dividend payout compared to its Schwab counterpart.
Performance & risk comparison
Metric SCHA IJR Max drawdown (5 yr) (30.8%) (28.0%) Growth of $1,000 over 5 years (total return) $1,380 $1,320
What's inside
The iShares Core S&P Small-Cap ETF tracks a more selective index of 640 holdings, focusing on companies that must meet specific market capitalization and profitability criteria. This focus on "quality" in the small-cap space is reflected in its sector exposure, which is balanced between financial services at 16%, industrials at 16%, and technology at 15%. Its largest positions include Viavi Solutions(NASDAQ:VIAV) at 0.74%, Sanmina(NASDAQ:SANM) at 0.71%, and Formfactor(NASDAQ:FORM) at 0.66%. The fund was launched in 2000 and has paid $1.60 per share in dividends over the trailing 12 months.
In contrast, the Schwab U.S. Small-Cap ETF offers much broader diversification through 1,721 holdings, capturing a wider slice of the total market. Its sector tilts favor technology at 18%, followed by financial services and industrials at 16% each. Its top holdings include Sandisk(NASDAQ:SNDK) at 4.08%, Lumentum(NASDAQ:LITE) at 1.53%, and Revolution Medicines(NASDAQ:RVMD) at 0.64%. The Schwab fund was launched in 2009 and has a trailing-12-month dividend of $0.34 per share. By including a larger number of holdings, it provides exposure to more micro-cap names that the more selective iShares fund might exclude.
Story Continues
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Investing in small-cap stocks is a great way to add diversification to a portfolio and deliver exposure to high-growth companies. Both the iShares Core S&P Small-Cap ETF (IJR) and Schwab U.S. Small-Cap ETF (SCHA) seek to help investors with this. Choosing between the pair comes down to a few factors.
SCHA’s much broader set of holdings, totaling nearly 2,000 equities, is more representative of the small-cap portion of the U.S. stock market. This helped it deliver a greater one-year return. Its share price is also far lower than IJR, with a 2-for-1 stock split performed in 2024 contributing to this.
SCHA’s downsides are its smaller AUM, which means reduced liquidity compared to IJR, and because small-cap stocks are more volatile than larger companies, the ETF’s greater slice of these businesses led to a larger max drawdown and beta. SCHA is better suited for investors who want a fund that’s more representative of the small-cap universe, and are willing to accept the higher risk.
IJR limits its holdings because it screens stocks based on quality filters, such as positive earnings. This lowers the investor risk inherent in small-cap companies, although it means a less diversified portfolio compared to SCHA. IJR also boasts a much bigger AUM, which can appeal to active traders. It is the better ETF for investors concerned with risk and volatility, and are willing to pay a slightly higher expense ratio in exchange for this greater stability.
Should you buy stock in iShares Core S&P Small-Cap ETF right now?
Before you buy stock in iShares Core S&P Small-Cap ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and iShares Core S&P Small-Cap ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $471,827!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,319,291!*
Now, it’s worth noting Stock Advisor’s total average return is 986% — a market-crushing outperformance compared to 207% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of May 11, 2026.
Robert Izquierdo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lumentum, Viavi Solutions, and iShares Core S&P Small-Cap ETF. The Motley Fool has a disclosure policy.
Small-Cap ETF Showdown: Schwab's SCHA vs. iShares' IJR was originally published by The Motley Fool
View Comments
- SPSM and IJR Own Identical Portfolios. Here's Why the Choice Still Matters.
May 11, 2026
The State Street SPDR Portfolio S&P 600 Small Cap ETF(NYSEMKT:SPSM) offers a lower-cost entry to small caps, while the iShares Core S&P Small-Cap ETF(NYSEMKT:IJR) provides superior liquidity and historical longevity.
Both funds target the S&P SmallCap 600 Index, providing exposure to profitable small-cap U.S. companies. While they share the same underlying index and risk profiles, investors typically choose between them based on subtle differences in expense ratios, trading volume, and assets under management (AUM).
Snapshot (cost & size)
Metric SPSM IJR Issuer SPDR iShares Expense ratio 0.03% 0.06% 1-yr return (as of May 7, 2026) 37.30% 37.10% Dividend yield 1.40% 1.20% Beta 1.04 1.04 AUM $15.6 billion $102.9 billion
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The State Street fund is more affordable with a 0.03% expense ratio, saving investors three dollars per $10,000 invested annually compared to the iShares fund. It also currently offers a slightly higher distribution yield of 1.40%.
Performance & risk comparison
Metric SPSM IJR Max drawdown (5 yr) (27.90%) (28.00%) Growth of $1,000 over 5 years (total return) $1,324 $1,320
What's inside
The iShares Core S&P Small-Cap ETF(NYSEMKT:IJR) holds 640 stocks and was launched in 2000. Its largest positions include Viavi Solutions(NASDAQ:VIAV) at 0.74%, Sanmina(NASDAQ:SANM) at 0.71%, and FormFactor(NASDAQ:FORM) at 0.66%. The fund focuses on financial services (16.00%), industrials (16.00%), and technology (15.00%). It has a trailing-12-month dividend of $1.60 per share.
The State Street SPDR Portfolio S&P 600 Small Cap ETF(NYSEMKT:SPSM) holds 606 stocks and was launched in 2013. Its top holdings include FormFactor(NASDAQ:FORM) at 0.61%, Viavi Solutions(NASDAQ:VIAV) at 0.58%, and Semtech(NASDAQ:SMTC) at 0.58%. It has a similar sector profile led by industrials (17.00%) and financial services (17.00%), and paid $0.77 per share over the trailing 12 months.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Small-cap stocks — companies too small for the S&P 500 — have historically outperformed large caps over long time horizons, but with a catch: The small-cap universe is full of speculative, unprofitable companies that can drag returns down significantly. Both SPSM and IJR sidestep that problem by tracking the S&P SmallCap 600, an index that requires profitability before admission. That shared quality screen is what sets them apart from broader small-cap funds.
Story Continues
In fact, these two funds are so similar that the choice between them is almost entirely about fund mechanics rather than strategy. Both hold the same roughly 600 companies in the same proportions. But SPSM charges half of what IJR does. That’s a difference that amounts to a few dollars annually per $10,000 invested, but one that compounds quietly over decades.
What IJR offers in return is scale and history. With roughly six times the assets and a track record stretching back to 2000, IJR is the more established vehicle and carries deeper liquidity. For buy-and-hold investors, SPSM's lower cost is the stronger argument. Those who value a longer track record and greater fund depth will find IJR worth the modest premium.
Should you buy stock in iShares Core S&P Small-Cap ETF right now?
Before you buy stock in iShares Core S&P Small-Cap ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and iShares Core S&P Small-Cap ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $471,827!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,319,291!*
Now, it’s worth noting Stock Advisor’s total average return is 986% — a market-crushing outperformance compared to 207% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of May 11, 2026.
Sara Appino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Viavi Solutions and iShares Core S&P Small-Cap ETF. The Motley Fool has a disclosure policy.
SPSM and IJR Own Identical Portfolios. Here's Why the Choice Still Matters. was originally published by The Motley Fool
View Comments
- Small-Cap ETF Showdown: Schwab's SCHA vs. iShares' IJR
May 11, 2026 · fool.com
Expense ratios, diversification, and sector tilts set these two small-cap ETFs apart. Explore how their strategies impact risk and long-term performance.
- SPSM and IJR Own Identical Portfolios. Here's Why the Choice Still Matters.
May 11, 2026 · fool.com
Expense ratios and dividend yields set these two small-cap ETFs apart, despite nearly identical returns and risk profiles over five years.
