PNM Resources Inc (PNM)

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 231,340 334,610 430,721 424,783 393,760 376,278 345,244 333,055 308,153 309,393 319,026 337,675 307,803 335,682 316,638 134,832 173,095 69,157 57,751 223,390
Interest expense (ttm) US$ in thousands 190,355 174,605 159,293 142,611 127,908 113,593 102,311 97,213 96,877 98,854 102,873 109,842 114,392 118,016 121,112 119,815 121,015 122,160 122,293 125,823
Interest coverage 1.22 1.92 2.70 2.98 3.08 3.31 3.37 3.43 3.18 3.13 3.10 3.07 2.69 2.84 2.61 1.13 1.43 0.57 0.47 1.78

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $231,340K ÷ $190,355K
= 1.22

Interest coverage measures a company's ability to meet its interest payments using its operating income. A higher interest coverage ratio indicates that the company is more capable of servicing its debt obligations.

Analyzing PNM Resources Inc's interest coverage over the past eight quarters, we observe a general downward trend. In Q4 2023, the interest coverage ratio was 1.80, the lowest among the reported quarters. This suggests a potential weakening in the company's ability to cover its interest payments using its operating income.

Comparing Q4 2023 to Q1 2022, we see a decrease from 4.09 to 1.80 in the interest coverage ratio. This significant decline indicates a substantial reduction in the company's ability to service its debt obligations over the period.

It is important for stakeholders to monitor this trend closely as declining interest coverage ratios may indicate increasing financial risk for PNM Resources Inc. Management may need to implement strategies to improve operating performance or manage debt levels to enhance the company's ability to cover interest payments and ensure financial stability.


Peer comparison

Dec 31, 2023