Constellation Energy Corp (CEG)
Interest coverage
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 4,017,000 | 1,738,000 | -291,000 | 449,000 | 1,193,000 |
| Interest expense | US$ in thousands | 506,000 | 431,000 | 251,000 | 297,000 | 357,000 |
| Interest coverage | 7.94 | 4.03 | -1.16 | 1.51 | 3.34 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $4,017,000K ÷ $506,000K
= 7.94
Constellation Energy Corp's interest coverage ratio has fluctuated over the past five years. As of December 31, 2020, the interest coverage ratio was 3.34, indicating that the company earned 3.34 times the amount of interest expenses it had to pay. However, by December 31, 2021, the ratio decreased to 1.51, signaling a decline in the company's ability to cover its interest obligations.
A concerning trend emerged by December 31, 2022, as the interest coverage ratio turned negative (-1.16), suggesting that the company's operating income was insufficient to cover its interest expenses during that period. This raises a red flag regarding Constellation Energy Corp's financial health and ability to meet its debt obligations.
Fortunately, the company's performance improved significantly by December 31, 2023, with an interest coverage ratio of 4.03, indicating a healthier financial position and better ability to cover interest payments. By December 31, 2024, Constellation Energy Corp's interest coverage ratio showed further improvement, reaching 7.94, demonstrating a strong ability to meet its interest obligations through its operating earnings.
In conclusion, Constellation Energy Corp experienced fluctuations in its interest coverage ratio over the analyzed period, with a notable dip into negative territory in 2022. However, the company managed to bounce back and demonstrate improved financial stability in the subsequent years.
Peer comparison
Dec 31, 2024