Chicago, IL – April 11, 2025 – Stocks in this week’s article are Sterling Infrastructure, Inc. STRL, Brinker International, Inc. EAT, Ralph Lauren Corp. RL and Deckers Outdoor Corp. DECK.
U.S. stocks staged their biggest rally yesterday after President Donald Trump announced a 90-day pause on reciprocal tariffs for all nations except China, which will now face a tariff of 125%. The Dow Jones Industrial Average jumped 2,962.86 points, or 7.87%, ending the day at 40,608.45. The S&P 500 soared 9.52% to finish at 5,456.90, while the Nasdaq Composite surged 12.16% to 17,124.97.
However, volatility prevails in the market. So, what is the best investment strategy now? An ill-informed investor can lose cash if he wagers on a stock only based on the numbers flashing on a real-time stock screen. A critical analysis of a company’s financial background is a must for a better investment decision, especially at a time when the stock market is juggling myriad issues.
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.
Sterling Infrastructure, Inc., Brinker International, Inc., Ralph Lauren Corp. and Deckers Outdoor Corp. boast an impressive interest coverage ratio.
The 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 the 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, the 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.
The 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 1 suggests that the company is unable to fulfill its interest obligations and could default on repaying debt. A company 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 time.
Here are four of the 10 stocks that qualified the screening:
Sterling Infrastructure, which is engaged in e-infrastructure, transportation and building solutions, sports a Zacks Rank #1 and has a VGM Score of B. Sterling Infrastructure delivered a trailing four-quarter earnings surprise of 16.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Sterling Infrastructure’s current financial year earnings per share (EPS) suggests growth of 34.6% from the year-ago period. STRL has risen 27.5% in the past year.
Brinker International, one of the world's leading casual dining restaurant companies and home of Chili's Grill & Bar and Maggiano's Little Italy, carries a Zacks Rank #2 and has a VGM Score of A. EAT has a trailing four-quarter earnings surprise of 24.7%, on average.
The Zacks Consensus Estimate for Brinker International’s current financial year sales and EPS indicates growth of 18.7% and 102.4%, respectively, from the year-ago period. EAT has surged 213.6% in the past year.
See the Zacks Earnings Calendar to stay ahead of market-making news.
Ralph Lauren, a global leader in the design, marketing and distribution of luxury lifestyle products, carries a Zacks Rank #2 and has a VGM Score of A. RL delivered a trailing four-quarter earnings surprise of 6.5%, on average.
The Zacks Consensus Estimate for Ralph Lauren’s current financial year sales and EPS suggests growth of 5.8% and 16.5%, respectively, from the year-ago period. RL has jumped 26.4% in the past year.
Deckers, a global leader in designing, marketing and distributing innovative footwear, apparel and accessories, currently carries a Zacks Rank #2 and has a VGM Score of B.
The Zacks Consensus Estimate for Deckers’ current financial year sales and EPS implies growth of 15.6% and 21%, respectively, from the year-ago period. DECK has a trailing four-quarter earnings surprise of 36.8%, on average. DECK has fallen 15.1% in the past year.
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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2443989/4-stocks-with-strong-interest-coverage-for-a-volatile-market
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Brinker International, Inc. (EAT) : Free Stock Analysis Report
Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report
Ralph Lauren Corporation (RL) : Free Stock Analysis Report
Sterling Infrastructure, Inc. (STRL) : Free Stock Analysis Report
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