Southwest Gas Holdings Inc (SWX)
Interest coverage
| 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 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 513,540 | 471,075 | 458,161 | 460,815 | 509,947 | 72,041 | 56,462 | 11,930 | -31,152 | 373,751 | 344,190 | 354,478 | 356,120 | 393,686 | 422,757 | 426,162 | 399,582 | 386,233 | 371,467 | 290,777 |
| Interest expense (ttm) | US$ in thousands | 297,043 | 296,712 | 290,979 | 286,557 | 292,286 | 295,487 | 287,862 | 271,721 | 242,750 | 203,939 | 170,864 | 143,597 | 119,198 | 109,537 | 106,550 | 107,061 | 111,477 | 111,705 | 110,828 | 111,209 |
| Interest coverage | 1.73 | 1.59 | 1.57 | 1.61 | 1.74 | 0.24 | 0.20 | 0.04 | -0.13 | 1.83 | 2.01 | 2.47 | 2.99 | 3.59 | 3.97 | 3.98 | 3.58 | 3.46 | 3.35 | 2.61 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $513,540K ÷ $297,043K
= 1.73
Interest coverage ratio is a financial metric used to evaluate a company's ability to pay interest on its outstanding debt. It is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expenses.
Analyzing Southwest Gas Holdings Inc's interest coverage ratio from March 31, 2020, to December 31, 2024, shows fluctuations in the company's ability to cover its interest expenses over time.
From March 31, 2020, to September 30, 2021, the company's interest coverage ratio generally increased from 2.61 to 3.59, indicating a strengthening ability to service its interest payments. However, there was a slight decline to 2.99 by December 31, 2021.
The ratio then experienced a notable drop to 2.47 by March 31, 2022, and continued to decrease to 0.04 by March 31, 2023, falling into negative territory at -0.13 by December 31, 2022. This suggests a significant decline in the company's ability to cover its interest expenses with its earnings.
However, there was a positive turnaround as the interest coverage ratio improved to 1.74 by December 31, 2023, and continued to increase slightly to 1.73 by December 31, 2024. Despite the improvement in the last two quarters, the ratio remains relatively low, indicating potential challenges in meeting interest obligations.
Overall, Southwest Gas Holdings Inc's interest coverage ratio has displayed volatility over the analyzed period, with notable declines in recent quarters raising concerns about the company's ability to comfortably cover its interest expenses. Further monitoring of this ratio is advisable to assess the company's financial health and debt-servicing capacity.
Peer comparison
Dec 31, 2024