Sterling Construction Company Inc (STRL)
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 | 383,533 | 219,935 | 159,367 | 109,818 | 93,690 |
| Interest expense | US$ in thousands | 25,255 | 29,320 | 20,591 | 19,311 | 29,332 |
| Interest coverage | 15.19 | 7.50 | 7.74 | 5.69 | 3.19 |
December 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $383,533K ÷ $25,255K
= 15.19
The interest coverage ratio for Sterling Construction Company Inc. demonstrates a consistent upward trajectory over the analyzed period, reflecting an improving capacity to meet interest obligations from operating earnings. As of December 31, 2020, the ratio stood at 3.19, indicating that earnings before interest and taxes (EBIT) were approximately 3.19 times the interest expense. This ratio increased significantly in 2021 to 5.69, signifying a substantial enhancement in earnings relative to interest obligations. The upward trend continued into 2022, reaching a ratio of 7.74, which further underscores improved financial stability and profitability.
The ratio marginally declined in 2023 to 7.50, but remained at a high level, maintaining a robust cushion over short-term debt obligations. This slight decrease does not critically impair the company's ability to service its interest expenses. The most notable change appears in 2024, where the interest coverage ratio escalates sharply to 15.19, indicating a markedly stronger position to meet interest expenses through operating earnings. Such a high ratio suggests exceptional financial health and significantly reduced risk associated with interest coverage.
Overall, the trend indicates that Sterling Construction Company Inc. has experienced substantial improvement in its ability to cover interest expenses over the examined period. The increasing ratios reflect a combination of improved profitability, prudent financial management, or both, which collectively contribute to a stronger financial footing. The considerable increase in 2024 signals a notably low risk profile regarding interest obligations and enhances investor confidence in the company's financial resilience.
Peer comparison
Dec 31, 2024