DXP Enterprises Inc (DXPE)
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 | 140,076 | 131,286 | 122,523 | 109,822 | 95,090 | 79,193 | 65,158 | 55,277 | 41,016 | 28,220 | -24,661 | -32,734 | -27,394 | -14,449 | 48,309 | 64,013 | 66,751 | 79,726 | 74,756 | 73,798 |
| Interest expense (ttm) | US$ in thousands | 53,146 | 47,593 | 41,742 | 35,494 | 29,135 | 22,855 | 21,286 | 21,008 | 21,089 | 24,356 | 22,844 | 21,437 | 20,571 | 16,646 | 17,880 | 18,835 | 19,498 | 19,889 | 19,684 | 20,936 |
| Interest coverage | 2.64 | 2.76 | 2.94 | 3.09 | 3.26 | 3.47 | 3.06 | 2.63 | 1.94 | 1.16 | -1.08 | -1.53 | -1.33 | -0.87 | 2.70 | 3.40 | 3.42 | 4.01 | 3.80 | 3.52 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $140,076K ÷ $53,146K
= 2.64
The interest coverage ratio for DXP Enterprises Inc provides insight into the company's ability to meet its interest obligations from its operating earnings. A higher interest coverage ratio indicates that the company is more capable of servicing its debt and is at a lower risk of default.
Analyzing the trend of DXP Enterprises Inc's interest coverage ratio over the periods provided, we observe fluctuations in the ratio. From December 2019 to December 2023, the interest coverage ratio has generally been above 1, indicating that the company's operating earnings were sufficient to cover its interest payments.
In the earlier periods, the interest coverage ratio ranged between 2.63 to 4.01, reflecting a relatively stable and healthy financial position. However, a decline in the interest coverage ratio followed, with negative ratios observed in the middle of 2021 and early 2022. This suggests that the company may have faced challenges in generating enough operating income to cover its interest expenses during these periods.
Subsequently, there was a recovery in the interest coverage ratio, reaching levels above 2.6 in the most recent periods of 2023. This improvement indicates a potential enhancement in the company's financial health and its ability to handle its interest obligations with greater ease.
Overall, while there were fluctuations in DXP Enterprises Inc's interest coverage ratio over the periods examined, the recent trend shows an upwards trajectory, signaling a better ability to cover interest payments from operating earnings. However, it is essential for the company to continue monitoring and managing its financial performance to ensure sustained improvement in its interest coverage ratio.
Peer comparison
Dec 31, 2023