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Golub Capital

Middle Market Report

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Golub Capital Middle Market Report

Featuring the Golub Capital Altman Index

Q4 2024

 

U.S. Middle Market Continues to Show Strong Earnings and Revenue Growth


Private equity-backed companies see sixth quarter of profit margin expansion.

Middle market private companies in the Golub Capital Altman Index grew earnings by 9% during the first two months of the fourth quarter of 2024. Revenue grew 6% during the same period.

The Golub Capital Altman Index can provide early insight into financial performance of public companies and GDP in advance of earnings season.

Golub Capital Altman Index Highlights

Year-Over-Year (YoY) Growth Revenue Earnings
Q4 2024 5.9% 9.3%
Key Sectors Q4 2024 (YoY) Revenue Earnings
Consumer 5.2% 7.7%
Healthcare 5.3% 4.4%
Industrials 6.3% 7.4%
Technology 9.1% 10.7%

Source: Golub Capital Internal Data.

Lawrence E. Golub, CEO of Golub Capital, said:

Revenue and earnings growth remained strong for companies in the Golub Capital Altman Index for the ninth consecutive quarter. The Consumer sector of the Index stands out for posting higher revenue and earnings growth rates in Q4 than in any other quarter of 2024. The solid performance of Consumer companies in our sample paints an encouraging picture of the U.S. consumer. We highlighted in prior quarters that the balance of headwinds and tailwinds facing consumers would be an important dynamic for investors to watch in the second half of 2024. Our early look at Q4 results suggests that the tailwinds from continued low unemployment, healthy wage growth, lower energy prices and lower interest rates prevailed. Looking forward, the health of the U.S. consumer may call for a slower pace of interest rate cuts than expected: one closer to the path implied by current Fed futures market prices than to the most recent Fed dot plot.

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January 10, 2025

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About the Golub Capital Altman Index

The Golub Capital Altman Index measures the actual revenue and EBITDA (earnings before interest, taxes, depreciation and amortization) growth of US middle market private companies for the first two months of each calendar quarter and provides insight into anticipated quarterly performance of US public companies. The data referenced herein may not reflect all companies in the loan portfolio of Golub Capital during the time periods indicated.

Reported shortly before public company earnings season, the performance of the Golub Capital Altman Index has been highly correlated with the median growth rates in revenue and EBITDA of the companies in the S&P 500, S&P SmallCap 600, and Russell 2000 indexes, as well as quarterly Gross Domestic Product (GDP), since data began to be tracked in 2012.

About Dr. Edward I. Altman
A leading expert on credit markets, Dr. Edward I. Altman is the Max L. Heine Professor of Finance, Emeritus at the NYU Stern School of Business, and Director of Research in Credit and Debt Markets at the NYU Salomon Center for the Study of Financial Institutions. He is currently an advisor to several foreign central banks. Professor Altman has published or edited two-dozen books and over 150
articles in scholarly finance, accounting and economic journals. He has been inducted into the Fixed Income Analysts Society Hall of Fame, served as President of the Financial Management Association, was an FMA Fellow, and was amongst the inaugural inductees into the Turnaround Management Association Hall of Fame. He received his MBA and Ph.D. in Finance from the University of California, Los Angeles.

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Important Disclosure

The Golub Capital Altman Index is provided as an indicator only and does not constitute investment advice or the offer to sell or a solicitation to buy any security. Some of these statements constitute forward-looking statements, which may be predictions about future events, future performance, or future financial conditions. Some of these statements reflect opinions based upon the data presented in the Index, and these opinions may be incorrect. Actual results could vary materially from those implied or expressed in such forward-looking statements for any reason. The Golub Capital Altman Index has been created on the basis of information provided by third-party sources that are believed to be reliable, but the information has not been verified independently by Golub Capital. Golub Capital makes no warranty or representation as to the accuracy or completeness of such third-party information.

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  1. The Golub Capital Altman Index is provided as an indicator only and does not constitute investment advice or the offer to sell or a solicitation to buy any security. Some of these statements constitute forward-looking statements, which may be predictions about future events, future performance, or future financial conditions. Some of these statements reflect opinions based upon the data presented in the Index, and these opinions may be incorrect. Actual results could vary materially from those implied or expressed in such forward-looking statements for any reason. The Golub Capital Altman Index has been created on the basis of information provided by third-party sources that are believed to be reliable, but the information has not been verified independently by Golub Capital. Golub Capital makes no warranty or representation as to the accuracy or completeness of such third-party information.