E. Schnapp Works' (TLV:SHNP) Soft Earnings Are Actually Better Than They Appear

The most recent earnings report from E. Schnapp & Co. Works Ltd (TLV:SHNP) was disappointing for shareholders. While the headline numbers were soft, we believe that investors might be missing some encouraging factors.

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How Do Unusual Items Influence Profit?

For anyone who wants to understand E. Schnapp Works' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₪12m due to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. In the twelve months to June 2025, E. Schnapp Works had a big unusual items expense. All else being equal, this would likely have the effect of making the statutory profit look worse than its underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of E. Schnapp Works.

Our Take On E. Schnapp Works' Profit Performance

As we mentioned previously, the E. Schnapp Works' profit was hampered by unusual items in the last year. Because of this, we think E. Schnapp Works' underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! Unfortunately, though, its earnings per share actually fell back over the last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Case in point: We've spotted 4 warning signs for E. Schnapp Works you should be mindful of and 1 of them shouldn't be ignored.

Today we've zoomed in on a single data point to better understand the nature of E. Schnapp Works' profit. But there is always more to discover if you are capable of focussing your mind on minutiae. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.