Estee Lauder Companies Inc (EL)

Interest coverage

		Jun 30, 2025	Mar 31, 2025	Dec 31, 2024	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	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	131,000	557,000	782,000	986,000	1,145,000	1,364,000	1,149,000	1,064,000	1,592,000	1,603,000	1,968,000	2,811,000	3,100,000	4,147,000	4,066,000	3,822,000	3,601,000	1,973,000	1,780,000	1,638,000
Interest expense (ttm)	US$ in thousands	404,000	360,000	367,000	375,000	378,000	386,000	350,000	304,000	255,000	198,000	181,000	171,000	167,000	167,000	169,000	170,000	173,000	180,000	179,000	174,000
Interest coverage		0.32	1.55	2.13	2.63	3.03	3.53	3.28	3.50	6.24	8.10	10.87	16.44	18.56	24.83	24.06	22.48	20.82	10.96	9.94	9.41

June 30, 2025 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $131,000K ÷ $404,000K
= 0.32

The interest coverage ratio for Estee Lauder Companies Inc. exhibits significant fluctuations over the reported periods. The ratio began at 9.41 on September 30, 2020, indicating a comfortable buffer over interest expenses. This upward trend continued, reaching a peak of 24.83 by March 31, 2022, suggesting a period of strong earnings relative to interest obligations.

Subsequently, the ratio experienced a decline, decreasing to 16.44 by September 30, 2022, and further narrowing to 10.87 at the end of 2022. The downward trend persisted into 2023, with ratios dropping to 8.10 on March 31, 2023, and then to 6.24 by June 30, 2023. The decline intensified in the subsequent quarters, with the ratio falling to 3.50 on September 30, 2023, and reaching 3.28 by the end of 2023.

The trend continued into 2024 and 2025, with the ratios diminishing further to 3.53 on March 31, 2024, 3.03 on June 30, 2024, 2.63 on September 30, 2024, and 2.13 at the end of 2024. The most recent data points show a stark reduction, with the ratio declining to 1.55 on March 31, 2025, and reaching 0.32 by June 30, 2025.

Overall, the interest coverage ratio has demonstrated a persistent downward trajectory from its high levels in early 2022, indicating a declining ability of the company to comfortably cover its interest expenses from earnings before interest and taxes. The ratios approaching closer to 1 or below signify increasing financial risk, with projected ratios suggesting an increasingly tight leverage position and potential concerns regarding the company's debt servicing capacity in the near term.