Constellation Brands Inc Class A (STZ)

Interest coverage

		Feb 29, 2024	Nov 30, 2023	Aug 31, 2023	May 31, 2023	Feb 28, 2023	Nov 30, 2022	Aug 31, 2022	May 31, 2022	Feb 28, 2022	Nov 30, 2021	Aug 31, 2021	May 31, 2021	Feb 28, 2021	Nov 30, 2020	Aug 31, 2020	May 31, 2020	Feb 29, 2020	Nov 30, 2019	Aug 31, 2019	May 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	3,169,700	3,007,000	2,956,800	2,791,200	2,842,900	3,053,700	3,146,900	3,073,000	2,331,700	2,213,500	2,156,700	2,256,200	2,791,100	2,776,900	1,803,000	353,400	-568,500	529,300	1,135,700	3,201,300
Interest expense (ttm)	US$ in thousands	435,400	450,200	444,700	428,400	398,700	367,400	356,700	358,200	356,400	360,300	368,000	372,400	385,700	-9,300	2,700	19,000	37,900	465,700	435,200	409,800
Interest coverage		7.28	6.68	6.65	6.52	7.13	8.31	8.82	8.58	6.54	6.14	5.86	6.06	7.24	—	667.78	18.60	-15.00	1.14	2.61	7.81

February 29, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $3,169,700K ÷ $435,400K
= 7.28

Constellation Brands Inc Class A's interest coverage ratio has shown variability over the past quarters, ranging from 5.86 to 8.82. The interest coverage ratio measures the company's ability to cover its interest expenses with its operating income. A higher ratio indicates a better ability to meet interest obligations.

Overall, Constellation Brands Inc Class A has maintained a generally healthy interest coverage ratio above 6 in recent quarters, suggesting that the company has sufficient earnings to cover its interest payments. However, the significant fluctuations in the ratio indicate potential changes in the company's financial stability and profitability.

It is noteworthy that there are outliers in the data such as the extremely high interest coverage ratio of 667.78 in August 2020 and the negative ratios in May 2020 and February 2020. These outliers may be due to non-recurring items or irregularities in the financial statements. Further investigation would be required to understand the reasons behind these unusual values.

In conclusion, while Constellation Brands Inc Class A has generally maintained a solid interest coverage ratio, analysts should closely monitor any significant deviations from the trend to assess the company's financial health and ability to meet its debt obligations in the long term.