Seagate Technology PLC (STX)
Interest coverage
| Jun 30, 2025 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 1,267,000 | 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 |
| Interest expense (ttm) | US$ in thousands | 321,000 | 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 |
| Interest coverage | 3.95 | 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 |
June 30, 2025 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,267,000K ÷ $321,000K
= 3.95
The analysis of Seagate Technology PLC's interest coverage ratios over the specified periods reveals significant fluctuations and a discernible trend in the company's ability to meet its interest obligations.
Initially, from September 30, 2020, to December 31, 2021, the interest coverage ratio demonstrates a generally strong and improving position, moving from 6.24 to a peak of 8.67. This indicates that during this period, Seagate was comfortably generating earnings sufficient to cover its interest expenses multiple times, reflecting sound financial health and effective management of debt servicing.
However, starting in the quarter ending March 31, 2022, a downward trend emerges, with the ratio declining to 8.58 in Q1 2022, and further decreasing to 7.69 in Q2 2022, and more sharply falling to 5.47 in Q3 2022. These declines suggest a weakening in Seagate’s capacity to generate earnings relative to interest obligations, possibly indicating increased interest expenses or reduced earnings before interest and taxes.
The decline becomes more pronounced in the subsequent periods, with the ratio dropping to 2.81 in Q4 2022, then turning negative in early 2023: -0.19 in Q1 2023, and further declining to -1.07 in Q2 2023, and -1.50 in Q3 2023. Negative interest coverage ratios indicate that the company's EBIT was insufficient to cover interest expenses in these periods, pointing to potentially severe financial distress or extraordinary challenges affecting profitability.
In the quarters beyond March 2023, the ratios exhibit some recovery: moving from -0.95 in Q4 2023 to 0.40 in Q1 2024, then improving to 2.35 in Q2 2024, 3.70 in Q3 2024, and reaching 4.72 in Q4 2024. Further positive ratios are observed in 2025, with 5.69 in Q1 2025 and 3.95 in Q2 2025. This resurgence suggests an operational turnaround or restructuring efforts that enhanced earnings relative to interest expenses, leading to a more manageable debt servicing capability.
Overall, the interest coverage data indicates a period of robust financial health and interest payment comfort for Seagate through 2021, followed by a sharp deterioration beginning in early 2022, culminating in periods of negative coverage that reflect significant leverage challenges or earnings pressures. The subsequent partial recovery points to potential operational improvements. Nevertheless, the historical trend underscores periods of heightened financial risk that investors and creditors should continually monitor, particularly given the periods of negative ratios which imply actual or potential difficulties in meeting interest obligations without additional earnings support or debt restructuring.
Peer comparison
Jun 30, 2025