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 | ||
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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