Middle market private companies in the Golub Capital Altman Index saw an 11 percent increase in earnings during the first two months of Q2 2024, while revenue grew by 7 percent 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."
Of the four tracked sectors, technology led the way with earnings growth of 19.0 percent and revenue growth of 9.8 percent. The other three sectors — consumer, healthcare, and industrial — also showed positive revenue and earnings growth, with 8.7 percent, 15.3 percent, and 9.8 percent respectively. On the earnings side, they grew 11.1 percent, 13.6 percent, and 19 percent.
The consumer sector was the weakest performer, with earnings up 2.5 percent and revenue increasing by 4.1 percent.
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