Seagate Technology PLC (STX)
Interest coverage
| Mar 31, 2025 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 1,865,000 | 1,573,000 | 1,233,000 | 780,000 | 134,000 | -315,000 | -488,000 | -336,000 | 56,000 | 775,000 | 1,427,000 | 1,914,000 | 2,084,000 | 2,071,000 | 1,848,000 | 1,513,000 | 1,208,000 | 1,189,000 | 1,223,000 | 1,261,000 |
| Interest expense (ttm) | US$ in thousands | 328,000 | 333,000 | 333,000 | 332,000 | 334,000 | 333,000 | 326,000 | 313,000 | 294,000 | 276,000 | 261,000 | 249,000 | 243,000 | 239,000 | 229,000 | 220,000 | 210,000 | 200,000 | 196,000 | 201,000 |
| Interest coverage | 5.69 | 4.72 | 3.70 | 2.35 | 0.40 | -0.95 | -1.50 | -1.07 | 0.19 | 2.81 | 5.47 | 7.69 | 8.58 | 8.67 | 8.07 | 6.88 | 5.75 | 5.94 | 6.24 | 6.27 |
March 31, 2025 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,865,000K ÷ $328,000K
= 5.69
The interest coverage ratio for Seagate Technology PLC has exhibited significant fluctuations over the analyzed periods. Initially, from June 30, 2020, through December 31, 2021, the ratio remained relatively stable and healthy, consistently exceeding 5.75, culminating in a peak of 8.67 on December 31, 2021. This suggests that during this timeframe, the company's earnings before interest and taxes (EBIT) comfortably covered its interest expenses, indicating a solid capacity to meet interest obligations.
However, starting in 2022, a downward trend becomes evident. The ratio declines sharply from 8.58 on March 31, 2022, to 2.81 by December 31, 2022. This sharp deterioration indicates a reduced ability of the company's EBIT to cover interest expenses, signaling increased financial risk. The downward trajectory worsens significantly in 2023, with the ratio dropping into negative territory, recording -1.07 on June 30, 2023, and further declining to -1.50 on September 30, 2023, and -0.95 on December 31, 2023. Negative interest coverage ratios imply that EBIT is insufficient to cover interest expenses, highlighting potentially severe financial distress.
In the subsequent periods, there is a notable improvement. The ratio turns positive again, reaching 0.40 on March 31, 2024, and rising further to 2.35 by June 30, 2024, and 3.70 by September 30, 2024. The ratio continues to improve, reaching 4.72 on December 31, 2024, and further ascending to 5.69 on March 31, 2025. This recovery suggests that the company's EBIT has increased relative to interest expenses, signaling a rehancement of its capacity to service debt.
Overall, the trend indicates an initial period of strong interest coverage, followed by a period of significant deterioration into negative territory, and finally a recovery phase. The recent improvements in the interest coverage ratio imply a positive development in Seagate’s ability to meet its interest obligations, although the prior volatility underscores periods of increasing financial risk.
Peer comparison
Mar 31, 2025