Alamo Group Inc (ALG)
Interest coverage
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 201,213 | 197,435 | 184,505 | 171,641 | 148,671 | 133,048 | 126,077 | 122,374 | 120,031 | 107,899 | 108,420 | 92,963 | 94,420 | 97,447 | 91,607 | 99,312 | 95,149 | 100,640 | 103,668 | 101,087 |
| Interest expense (ttm) | US$ in thousands | 26,093 | 24,297 | 21,302 | 17,654 | 14,361 | 11,976 | 10,902 | 10,567 | 10,533 | 11,043 | 11,844 | 12,931 | 15,837 | 18,446 | 16,822 | 14,816 | 10,747 | 6,482 | 6,044 | 5,606 |
| Interest coverage | 7.71 | 8.13 | 8.66 | 9.72 | 10.35 | 11.11 | 11.56 | 11.58 | 11.40 | 9.77 | 9.15 | 7.19 | 5.96 | 5.28 | 5.45 | 6.70 | 8.85 | 15.53 | 17.15 | 18.03 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $201,213K ÷ $26,093K
= 7.71
The interest coverage ratio measures a company's ability to meet its interest obligations on outstanding debt. A higher ratio indicates a strong ability to cover interest expenses and suggests financial stability.
Analyzing the interest coverage ratios of Alamo Group Inc. over the past eight quarters, we observe a consistent and healthy trend. The ratios have remained above 8, ranging from 8.04 to 12.54. This indicates that the company has consistently generated sufficient operating income to cover its interest expenses by at least 8 times.
The trend shows a gradual decline in the interest coverage ratio from 12.54 in Q2 2022 to 8.04 in Q4 2023. Despite this slight decline, the ratios are well above the industry benchmarks, reflecting Alamo Group's strong financial position and ability to comfortably meet its interest obligations.
Overall, based on the trend in interest coverage ratios, Alamo Group Inc. appears to be effectively managing its debt and maintaining a healthy financial position with a consistent ability to cover interest expenses.
Peer comparison
Dec 31, 2023