Middle-market companies experienced accelerated earnings growth in the third quarter of 2017, led by the information technology sector, according to a new report from lender Golub Capital.
During the first two months of the third quarter, private middle-market companies in the Golub Capital Altman Index experienced year-over-year earnings growth of 4.89 percent, compared with 2.29 percent year-over-year growth in the second quarter. Revenue rose 6.79 percent in the first two months of the third quarter, compared with an 8.94 percent gain in the second quarter.
“Earnings growth began to catch up with revenue growth, suggesting the middle-market firms in our sample continued to improve cost control and productivity,” said Lawrence E. Golub, CEO of Golub Capital, in the report.
The technology and industrials sectors experienced acceleration in earnings growth, which Golub attributed to a weakened U.S. dollar and improved economic performance in the Eurozone. The information technology sector posted 9.63 percent earnings growth in the third quarter; the industrials sector followed with 9.09 percent growth. Health care lagged in profitability, with an earnings decline of 2.19 percent.
The findings were published in the Golub Capital Middle Market Report. It used data from the Golub Capital Altman Index, which measures median revenue and EBITDA of more than 150 private U.S. companies within Golub Capital’s loan portfolio.
Kathryn Mulligan is the associate editor of Middle Market Growth.