Lamb Weston Holdings Inc (LW)
Interest coverage
| May 31, 2025 | May 31, 2024 | May 26, 2024 | May 31, 2023 | May 28, 2023 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 665,100 | 1,065,300 | 1,065,300 | 882,100 | 882,100 |
| Interest expense | US$ in thousands | 180,000 | 135,800 | 4,500 | 109,200 | 4,300 |
| Interest coverage | 3.70 | 7.84 | 236.73 | 8.08 | 205.14 |
May 31, 2025 calculation
Interest coverage = EBIT ÷ Interest expense
= $665,100K ÷ $180,000K
= 3.70
The interest coverage ratios of Lamb Weston Holdings Inc over the specified periods reveal significant fluctuations indicative of varying financial robustness and interest expense management. As of May 28, 2023, the interest coverage stood at a notably high level of 205.14, suggesting an exceptional capacity to meet interest obligations through earnings before interest and taxes (EBIT). This figure sharply decreased by the following week to 8.08 on May 31, 2023, indicating a substantial decline and potentially raising concerns about short-term interest coverage sustainability.
Looking forward, the projections up to May 26, 2024, and May 31, 2024, demonstrate an impressive rebound, with ratios reaching 236.73 and 7.84, respectively. The spike on May 26, 2024, reiterates a very strong earnings buffer relative to interest expenses. However, the subsequent decrease by May 31, 2024, aligns with the previous year's decline, implying ongoing variability in earnings relative to interest obligations.
Farther ahead, the interest coverage ratio forecasted for May 31, 2025, drops to 3.70, signaling a substantial narrowing of the margin by which earnings can cover interest expenses. While still above the typical threshold of 1.5 to 2.0 considered healthy, this decline indicates a potential increase in risk, reflecting either diminished earnings or elevated interest costs.
In summary, Lamb Weston Holdings Inc's interest coverage ratios have exhibited considerable volatility over the analyzed periods. The high ratios at certain points denote a strong ability to service interest, but the marked reductions in subsequent periods suggest periods of strain or earnings variability that merit ongoing monitoring to assess the company's financial stability and risk profile relative to its interest obligations.
Peer comparison
May 31, 2025