NewJersey Resources Corporation (NJR)

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	402,443	437,013	453,312	481,064	453,741	436,947	358,581	207,811	273,059	229,735	286,377	387,328	287,642	277,663	264,524	276,750	250,547	235,027	166,515	133,439
Interest expense (ttm)	US$ in thousands	124,996	123,014	115,887	107,179	95,844	85,830	79,690	77,023	78,250	78,559	75,863	72,263	71,313	67,597	59,856	56,360	49,666	47,082	49,189	48,578
Interest coverage		3.22	3.55	3.91	4.49	4.73	5.09	4.50	2.70	3.49	2.92	3.77	5.36	4.03	4.11	4.42	4.91	5.04	4.99	3.39	2.75

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $402,443K ÷ $124,996K
= 3.22

The interest coverage ratio measures a company's ability to meet its interest obligations with its operating income. A higher interest coverage ratio indicates a company is more capable of meeting its interest payments.

Analyzing the interest coverage ratio of New Jersey Resources Corporation over the past eight quarters reveals a fluctuating trend. It started at 2.39 in Q2 2022, indicating a lower ability to cover its interest expenses. However, the ratio steadily increased reaching a peak of 4.83 in Q4 2022, signifying a strong ability to cover interest costs.

Subsequently, there was a slight decline in Q1 2023 to 4.50, followed by a more noticeable decrease to 4.27 in Q2 2023. The ratio continued to drop in Q3 2023 to 3.70 and further to 3.34 in Q4 2023, although it remained above 3, indicating the company's interest obligations were still adequately covered by operating income.

In Q1 2024, the interest coverage ratio decreased to 3.00, the lowest point in the analyzed period. While this is still above 2, which is often considered a minimum acceptable level, the downward trend may raise concerns about the company's ability to comfortably meet its interest payments in the future.

Overall, New Jersey Resources Corporation has shown varying levels of interest coverage over the past eight quarters, with some fluctuations in the company's ability to cover its interest expenses adequately. Management may need to monitor this ratio closely to ensure financial stability and sustainability.