Constellation Brands Inc Class A (STZ)

Interest coverage

		Nov 30, 2024	Aug 31, 2024	May 31, 2024	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
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	1,165,800	1,142,900	3,352,200	2,677,200	2,455,800	2,410,000	517,200	781,500	989,300	947,800	2,100,900	664,100	657,800	1,554,300	2,072,700	3,531,800	3,579,100	1,831,500	472,800	-464,300
Interest expense (ttm)	US$ in thousands	413,600	413,400	420,000	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	395,300	402,700	414,100	428,700
Interest coverage		2.82	2.76	7.98	6.15	5.45	5.42	1.21	1.96	2.69	2.66	5.87	1.86	1.83	4.22	5.57	9.16	9.05	4.55	1.14	-1.08

November 30, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,165,800K ÷ $413,600K
= 2.82

The interest coverage ratio of Constellation Brands Inc Class A has shown fluctuations during the period from February 29, 2020, to November 30, 2024. The ratio indicates the company's ability to meet its interest obligations from its earnings before interest and taxes (EBIT).

The interest coverage ratio was below 1 in February 29, 2020, indicating that the company's EBIT was insufficient to cover its interest expenses, posing a potential financial risk. However, from May 31, 2020, onwards, the ratio improved steadily, reaching a peak of 9.16 on February 28, 2021.

Subsequently, the interest coverage ratio declined to 1.83 by November 30, 2021, and remained relatively low through February 28, 2023. This downward trend suggests a potential strain on the company's ability to cover its interest payments with its operating income.

In the later period, the ratio fluctuated, showing intermittent improvements and declines. The ratio was highest at 7.98 on May 31, 2024, but dropped to 2.76 on August 31, 2024, indicating some inconsistency in the company's ability to service its debt.

Overall, the trend in Constellation Brands Inc Class A's interest coverage ratio reveals periods of both strength and weakness in its ability to cover interest expenses with operating income. It is crucial for investors and stakeholders to monitor these fluctuations to assess the company's financial health and debt repayment capacity over time.