For Immediate Release
Chicago, IL – April 6, 2021 – Stocks in this week’s article are KB Home (
KBH Quick Quote KBH - Free Report) , Boot Barn Holdings, Inc. ( BOOT Quick Quote BOOT - Free Report) , Crocs, Inc. ( CROX Quick Quote CROX - Free Report) and Deckers Outdoor Corporation ( DECK Quick Quote DECK - Free Report) . Scoop Up These Stocks with Amazing Interest Coverage Ratio
An ill-informed investor can end up losing cash if he wagers on a stock only on the basis of the numbers flashing on a real-time stock screen. A critical analysis of a company's financial background is essential for wise investment decisions.
Often, investors evaluate a company's performance by simply looking at its sales and earnings, which sometimes do not reveal the real picture. To be more precise, they do not tell whether a company's fundamentals are sound enough to meet its financial obligations. Here, the coverage ratio comes into play — the higher the metric, the more efficient an enterprise will be in meeting its financial obligations.
Why Interest Coverage Ratio?
Interest Coverage Ratio is used to determine how effectively a company can pay interest charges on its debt.
Debt, which is crucial to financing operations for majority of companies, comes at a cost called interest. Interest expense has a direct bearing on the profitability of a company. The company's creditworthiness depends on how effectively it meets its interest obligations. Therefore, Interest Coverage Ratio is one of the important criteria to factor in before making any investment decision.
Interest Coverage Ratio = Earnings before Interest & Taxes (EBIT) divided by Interest Expense.
Interest Coverage Ratio suggests how many times the interest could be paid from earnings and gauges the margin of safety a firm has for paying interest.
An interest coverage ratio lower than one suggests that the company is unable to fulfill its interest obligations and could default on repaying debt. A company that is capable of generating earnings well above its interest expense can withstand financial hardships. One should also track the company's past performance to determine whether the interest coverage ratio has improved or worsened over a period of time.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1348588/scoop-up-these-4-stocks-with-amazing-interest-coverage-ratio Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. About Screen of the Week
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Contact: Jim Giaquinto
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