Dream Finders Homes Inc (DFH)

Interest coverage

		Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	1,118,821	421,395	410,218	411,144	387,870	359,660	351,454	344,204	297,941	241,184	188,288	149,260
Interest expense (ttm)	US$ in thousands	241,666	365,953	367,153	368,285	126,620	2,338	1,151	32	31	40	43	672
Interest coverage		4.63	1.15	1.12	1.12	3.06	153.83	305.35	10,756.38	9,611.00	6,029.60	4,378.79	222.11

September 30, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,118,821K ÷ $241,666K
= 4.63

The interest coverage ratio indicates the company's ability to meet its interest obligations from its earnings before interest and taxes. A higher interest coverage ratio is generally favorable as it shows that the company has more earnings available to cover its interest expenses.

Looking at the historical trend of Dream Finders Homes Inc's interest coverage ratio, we can see fluctuations over the quarters. In the most recent quarter (ending Sep 30, 2024), the interest coverage ratio was 4.63, which indicates that the company's operating income was able to cover its interest expenses nearly five times over. This suggests a healthy ability to meet its interest obligations.

However, in the preceding quarters of Jun 30, 2024, Mar 31, 2024, and Dec 31, 2023, the interest coverage ratios were notably lower at 1.15, 1.12, and 1.12 respectively. This downward trend raises concerns about the company's ability to cover its interest expenses from its operating income during that period.

Notably, the interest coverage ratio significantly spiked in the quarter ending Mar 31, 2023, and Dec 31, 2022, to unusually high levels of 305.35 and 10,756.38 respectively. Such exceptionally high ratios may be indicative of unique financial events skewing the results, which could potentially be due to anomalies or one-time gains impacting the earnings.

Furthermore, the interest coverage ratio for Sep 30, 2023 was 3.06, which shows a moderate ability to cover interest expenses. In contrast, the interest coverage ratios for Jun 30, 2023, Mar 31, 2023, and Dec 31, 2021 were abnormally high at 153.83, 305.35, and 222.11 respectively, which might indicate irregularities in the financial performance during those periods.

Overall, while Dream Finders Homes Inc has shown varying levels of interest coverage over the quarters, the recent ratio of 4.63 indicates a solid ability to meet its interest obligations. Analysts should closely monitor trends in the interest coverage ratio to assess the company's financial health and stability.