Seagate Technology PLC (STX)
Interest coverage
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | — | 766,000 | -212,000 | 1,958,000 | 1,500,000 |
| Interest expense | US$ in thousands | 321,000 | 332,000 | 313,000 | 249,000 | 220,000 |
| Interest coverage | 0.00 | 2.31 | -0.68 | 7.86 | 6.82 |
June 30, 2025 calculation
Interest coverage = EBIT ÷ Interest expense
= $—K ÷ $321,000K
= 0.00
The interest coverage ratio for Seagate Technology PLC over the period from June 30, 2021, to June 30, 2025, exhibits significant fluctuations, reflecting variations in the company's ability to meet its interest obligations through operating earnings.
In the fiscal year ending June 30, 2021, the company maintained a robust interest coverage ratio of 6.82, indicating that its operating income was approximately 6.82 times greater than its interest expenses. This level suggests a comfortable margin of safety and a healthy capacity to service debt obligations.
The subsequent year, ending June 30, 2022, saw an improvement in the ratio to 7.86. This increase underscores an enhancement in operating earnings relative to interest expenses, further strengthening the company's financial cushion and highlighting improved profitability or reduced interest costs.
However, a substantial adverse change is observed in the fiscal year ending June 30, 2023, when the ratio declines to -0.68. The negative value indicates that operating earnings were insufficient to cover interest expenses, and the company likely incurred a pretax operating loss or faced extraordinary circumstances leading to negative earnings. This deterioration signifies a critical liquidity concern, as the company's ability to meet interest obligations has been compromised.
In the following fiscal year, ending June 30, 2024, the ratio recovers to 2.31. While this indicates a significant improvement relative to the previous year and suggests that operating earnings once again surpass interest expenses, the ratio remains lower than historical levels, implying ongoing challenges but an improved capacity to service debt.
By June 30, 2025, the interest coverage ratio reaches 0.00, signaling an absence of operating income available to cover interest expenses, possibly due to operating losses or extraordinary charges that eliminated earnings from operations. Such a scenario suggests severe financial distress and would typically warrant further investigation into the company's operational performance and financial health.
Overall, the trend in Seagate's interest coverage ratio illustrates periods of strong financial health interrupted by a notable decline into negative territory, raising concerns about liquidity and solvency in recent years. The fluctuations highlight the importance of assessing underlying operational factors and potential risk factors affecting earnings stability and debt servicing capacity.
Peer comparison
Jun 30, 2025