Stepan Company (SCL)
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 | 58,613 | 70,074 | 105,216 | 165,047 | 207,336 | 215,642 | 201,196 | 180,213 | 170,781 | 126,389 | 128,571 | 116,537 | 102,627 | 155,513 | 141,084 | 137,526 | 127,260 | 134,220 | 133,399 | 137,720 |
| Interest expense (ttm) | US$ in thousands | 12,103 | 12,229 | 11,463 | 10,325 | 9,809 | 9,572 | 8,950 | 7,790 | 7,008 | 5,984 | 6,011 | 5,703 | 5,409 | 5,026 | 4,802 | 5,309 | 5,932 | 7,172 | 8,567 | 9,473 |
| Interest coverage | 4.84 | 5.73 | 9.18 | 15.99 | 21.14 | 22.53 | 22.48 | 23.13 | 24.37 | 21.12 | 21.39 | 20.43 | 18.97 | 30.94 | 29.38 | 25.90 | 21.45 | 18.71 | 15.57 | 14.54 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $58,613K ÷ $12,103K
= 4.84
The interest coverage ratio of Stepan Co. has shown a declining trend over the past quarters, indicating a decrease in the company's ability to cover its interest expenses with its operating income. In Q4 2023, the interest coverage ratio was 6.36, lower than the previous quarter's ratio of 6.44. This downward trend raises concerns as it suggests that Stepan Co.'s ability to meet its interest obligations may be weakening.
Comparing the current interest coverage ratio to the same quarter in the previous year, there has been a significant decrease. The ratio of 6.36 in Q4 2023 is notably lower than the ratio of 20.31 in Q4 2022, showing a substantial deterioration in the company's ability to cover interest expenses. This trend of declining interest coverage ratios over the past quarters indicates that Stepan Co. may be facing challenges in generating sufficient operating income to meet its debt obligations.
Furthermore, the interest coverage ratios in the most recent quarters are well below the ratios seen in the same quarters the previous year, reflecting a consistent decline in the company's ability to service its debt. Stepan Co. should closely monitor this trend and take appropriate measures to improve its financial health and ensure it can meet its interest payments in the future.
Peer comparison
Dec 31, 2023