Interest Coverage as a Key Metric for Safer 2026 Investing

As 2026 approaches, investors navigating a high-interest-rate environment must prioritize companies with robust financial health to mitigate risk. Among the most critical metrics for evaluating debt sustainability is the interest coverage ratio, which measures a company's ability to meet interest obligations using its earnings. This article examines four stocks-Life Time Group (LTH), Cardinal Health (CAH), LeMaitre Vascular (LMAT), and Flowserve (FLS)-that demonstrate exceptional interest coverage, strong earnings resilience, and growth potential, making them compelling choices for risk-aware investors.

Life Time Group (LTH): A Model of Operational and Financial Strength

Life Time Group's Q3 2025 results underscore its resilience, with total revenue rising 12.9% to $782.6 million and net income surging 147.3% to $102.4 million according to Q3 2025 financial results. While the company's exact interest coverage ratio for the quarter is not disclosed, its general financial profile is described as "impressive" in analyses highlighting its safety as an investment heading into 2026. This strength is further reinforced by its consistent revenue growth and expanding Adjusted EBITDA, which hit $220.0 million in Q3 2025, up 22.0% year-over-year according to Q3 2025 financial results. For investors, LTH's ability to generate strong cash flows while maintaining manageable debt levels positions it as a low-risk, high-growth opportunity.

Cardinal Health (CAH): A Fortress of Debt Management

Cardinal Health's Q3 2025 financial report provides a clear example of how strong interest coverage can insulate a company from macroeconomic volatility. The firm reported an interest coverage ratio of 11.8x, meaning its EBIT of $2.7 billion comfortably covered interest expenses multiple times over according to financial analysis. This metric is particularly significant given CAH's debt-to-equity ratio of -330.7%, a figure that might raise red flags for less financially disciplined companies. However, CAH's operational efficiency and projected sales and EPS growth of 16.2% and 19.7% for 2025 demonstrate its capacity to service debt while expanding profitability. With a Zacks Rank #2 and a VGM Score of A, CAH is a prime example of how robust interest coverage can underpin long-term stability.

LeMaitre Vascular (LMAT): Earnings Resilience Amid Revenue Challenges

LeMaitre Vascular's Q3 2025 performance highlights the importance of earnings resilience. While the company missed revenue estimates by 1.98%, it exceeded EPS expectations by 8.77%, reporting $0.62 per share. This divergence reflects strong cost controls and margin expansion, with adjusted gross margins improving to 70.8% year-over-year. Though the exact interest coverage ratio for Q3 2025 is not disclosed, LMAT is consistently described as having a "strong" coverage ratio in 2026-focused analyses. The company's ability to raise full-year revenue guidance to $248 million (13% growth) and project a 22% increase in adjusted EPS for 2025 further underscores its debt-sustainable trajectory. For investors, LMAT's focus on high-margin products like its Artegraft biologic and its $343.1 million cash balance offer additional layers of security.

Flowserve (FLS): Operational Excellence and Strategic Capital Allocation

Flowserve's Q3 2025 results exemplify how operational improvements can drive both profitability and debt sustainability. The company reported an interest coverage ratio of 8.2x, supported by EBIT of $588.6 million and adjusted operating margins of 14.8%. These metrics, combined with cash generated from operations of $402 million, enabled Flowserve to return $173 million to shareholders via dividends and buybacks. The firm also raised its full-year 2025 adjusted EPS guidance to $3.40–$3.50, a 31% increase at the midpoint according to earnings call transcript. With a Zacks Rank #2 and a VGM Score of B, FLS's strategic divestiture of legacy asbestos liabilities further enhances its cash flow and capital allocation flexibility, making it a compelling play for 2026.

Conclusion: Building a Safer 2026 Portfolio

For investors prioritizing debt sustainability and earnings resilience, the interest coverage ratios of LTH, CAH, LMAT, and FLS provide a clear roadmap. While CAH and FLS offer quantifiable metrics (11.8x and 8.2x, respectively), LTH and LMAT's broader financial strength-evidenced by revenue growth, margin expansion, and strong cash balances-further solidifies their appeal. These companies, coupled with favorable Zacks Ranks and growth projections, represent a diversified approach to risk management in an uncertain economic climate. As 2026 unfolds, investors who prioritize interest coverage as a core metric will find these stocks well-positioned to navigate volatility while delivering long-term value.