Stepan Company (SCL)
Interest coverage
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 79,904 | 64,337 | 209,312 | 174,436 | 153,860 |
| Interest expense | US$ in thousands | 19,465 | 15,946 | 9,809 | 7,008 | 7,580 |
| Interest coverage | 4.11 | 4.03 | 21.34 | 24.89 | 20.30 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $79,904K ÷ $19,465K
= 4.11
Based on the provided data for Stepan Company's interest coverage ratio over the years, the trend shows a generally positive performance until the end of 2022, where the interest coverage ratio was above 20, indicating that the company's operating income was more than sufficient to cover its interest expenses.
However, there was a significant decline in the interest coverage ratio in both 2023 and 2024, dropping to around 4. This sharp decrease may raise concerns about the company's ability to comfortably cover its interest payments with its operating income during these two years.
The substantial decrease in the interest coverage ratio in 2023 and 2024 could suggest a decline in the company's profitability or an increase in its interest expenses relative to earnings. It warrants further investigation into the factors impacting the company's financial performance during these specific years to assess the sustainability of its debt obligations in the future.
Peer comparison
Dec 31, 2024