NRG Energy Inc. (NRG)
Interest coverage
| 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 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 2,309,000 | 2,190,000 | 3,489,000 | 2,845,000 | 458,000 | -1,650,000 | -2,051,000 | -1,858,000 | 2,080,000 | 2,884,000 | 4,981,000 | 5,794,000 | 3,344,000 | 3,798,000 | 1,911,000 | 845,000 | 1,138,000 | 1,434,000 | 1,529,000 | 1,283,000 |
| Interest expense (ttm) | US$ in thousands | 651,000 | 695,000 | 655,000 | 643,000 | 639,000 | 576,000 | 508,000 | 462,000 | 417,000 | 424,000 | 441,000 | 461,000 | 485,000 | 483,000 | 460,000 | 431,000 | 402,000 | 388,000 | 388,000 | 397,000 |
| Interest coverage | 3.55 | 3.15 | 5.33 | 4.42 | 0.72 | -2.86 | -4.04 | -4.02 | 4.99 | 6.80 | 11.29 | 12.57 | 6.89 | 7.86 | 4.15 | 1.96 | 2.83 | 3.70 | 3.94 | 3.23 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $2,309,000K ÷ $651,000K
= 3.55
Interest coverage ratio indicates a company's ability to meet its interest obligations on outstanding debt. A higher interest coverage ratio is generally favorable as it suggests that the company is generating enough operating income to cover its interest expenses.
Analyzing the interest coverage ratio of NRG Energy Inc. over the past few years, it has shown fluctuations. The interest coverage ratio was relatively stable around 3 to 4 from March 2020 to December 2021. However, there was a notable improvement in the ratio from March 2022 to June 2022, reaching its peak at over 12. This significant increase indicates that the company's operating income was more than sufficient to cover its interest expenses during this period.
Subsequently, from September 2022 to December 2024, the interest coverage ratio declined but remained generally above 3. This downward trend may suggest a decrease in the company's ability to cover its interest payments from operating profits.
It is important to note the negative interest coverage ratios reported for the periods from March 2023 to September 2023. A negative interest coverage ratio implies that the company's operating income was not enough to cover its interest expenses during those quarters, signaling financial distress.
Overall, the interest coverage ratio of NRG Energy Inc. has exhibited fluctuations over the years, indicating variations in the company's ability to meet its interest obligations with its operating income. Investors and creditors should continue to monitor this ratio to assess the company's financial health and debt repayment capacity.
Peer comparison
Dec 31, 2024