SM Energy Co (SM)
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 | 1,109,853 | 1,132,045 | 979,310 | 921,399 | 991,376 | 1,027,433 | 1,317,703 | 1,616,769 | 1,859,785 | 1,988,228 | 1,628,618 | 936,580 | 205,755 | -280,845 | -478,044 | -387,344 | -612,343 | -579,791 | -409,920 | -213,394 |
| Interest expense (ttm) | US$ in thousands | 140,659 | 118,279 | 90,703 | 91,044 | 91,630 | 90,351 | 90,070 | 103,418 | 120,346 | 137,793 | 155,829 | 159,869 | 160,353 | 160,775 | 161,433 | 162,251 | 163,892 | 164,296 | 163,361 | 162,634 |
| Interest coverage | 7.89 | 9.57 | 10.80 | 10.12 | 10.82 | 11.37 | 14.63 | 15.63 | 15.45 | 14.43 | 10.45 | 5.86 | 1.28 | -1.75 | -2.96 | -2.39 | -3.74 | -3.53 | -2.51 | -1.31 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,109,853K ÷ $140,659K
= 7.89
The interest coverage ratio of SM Energy Co shows a fluctuating trend over the reporting periods provided.
Starting from negative figures in the first half of 2020, indicating that the company's earnings were insufficient to cover its interest expenses, the ratio improved significantly towards the end of 2021 and continued to rise through 2022 and 2023. By the end of 2023, the interest coverage ratio surpassed 10, indicating that the company's operating income was more than sufficient to cover its interest obligations.
However, by the end of 2024, the interest coverage ratio showed a slight decline from its peak in the previous periods but remained at a healthy level above 7. This suggests that SM Energy Co maintained a strong capacity to meet its interest payments from its operating profits, although a slight decrease in coverage compared to the peak levels was observed.
Overall, the recent trend in SM Energy Co's interest coverage ratio indicates an improvement in financial performance and a better ability to service its debt obligations from its operating income. Investors and stakeholders may view this positively as it indicates the company's strengthening financial position in terms of managing its interest expenses.
Peer comparison
Dec 31, 2024