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Golub Capital Altman Index Shows U.S. Middle Market Performance Remains Consistent

July 10, 2024, 07:55 AM
Filed Under: Industry News

Middle market private companies in the Golub Capital Altman Index grew earnings by 11% during the first two months of the second quarter of 2024. Revenue grew 7% during the same period.

Lawrence E. Golub, CEO of Golub Capital, said, “Q2 2024 performance was once again strong, marking the seventh consecutive quarter of robust median revenue and earnings growth for companies in the Golub Capital Altman Index. That said, there was notable divergence between the relatively less strong performance of the Consumer sector and the double-digit earnings growth of the Healthcare, Industrials and Technology sectors. We have been anticipating a reduced growth rate in the Consumer sector as the effects of pandemic-era stimulus and excess savings continue to run off. These numbers are actually a little better than expected in that context, as wage growth, job creation, immigration and low unemployment have kept consumer spending reasonably healthy. We believe the balance of headwinds and tailwinds facing consumers will be an important dynamic for investors to watch in the second half of 2024.”

Dr. Edward I. Altman said, “The strong Q2 2024 performance of Healthcare, Industrial and Technology companies in the Golub Capital Altman Index sample is an encouraging sign heading into public company earnings season. At the same time, we would caution against over-optimism; recent macroeconomic data has been mixed, with strong June jobs growth appearing alongside weakness in areas like housing starts and the ISM Services index. Another economic headwind in the first half of 2024 was the challenge to many firms to meet escalating interest payments on their higher levels of debt. We believe it’s prudent for investors to remain humble about risk and uncertainty in today’s environment and to focus on investments and strategies that are likely to perform well across a wide range of potential scenarios.”

The Golub Capital Altman Index (“GCAI”), which is produced by Golub Capital in collaboration with credit expert Dr. Edward I. Altman, is the first and longest-running index based on actual revenue and earnings (defined as earnings before interest, taxes, depreciation and amortization, or “EBITDA”) for middle market companies. It measures the median revenue and earnings growth of approximately 110–150 private U.S. companies in the loan portfolio of Golub Capital, a leading middle market lender. Reported shortly before public company quarterly earnings season, the GCAI has served as a reliable indicator of the overall growth rates in revenue and earnings of public companies in market indexes such as the S&P 500 and S&P SmallCap 600 (“S&P 600”), as well as quarterly Gross Domestic Product (“GDP”), according to statistical back-testing dating back to 2012, when data began to be tracked.

The size and diversity of the Golub Capital loan portfolio ensure that the confidentiality of all company-specific information used in the index is maintained in both the aggregate and industry segment data.

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