We Think That There Are Some Issues For Tgi Infrastructures (TLV:TGI) Beyond Its Promising Earnings

The market shrugged off Tgi Infrastructures Ltd's (TLV:TGI) solid earnings report. We did some digging and believe investors may be worried about some underlying factors in the report.

Check out our latest analysis for Tgi Infrastructures

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Tgi Infrastructures' profit received a boost of ₪18m in unusual items, over the last year. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And that's as you'd expect, given these boosts are described as 'unusual'. Tgi Infrastructures had a rather significant contribution from unusual items relative to its profit to March 2024. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Tgi Infrastructures.

Our Take On Tgi Infrastructures' Profit Performance

As previously mentioned, Tgi Infrastructures' large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. As a result, we think it may well be the case that Tgi Infrastructures' underlying earnings power is lower than its statutory profit. The good news is that, its earnings per share increased by 22% in the last year. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. So while earnings quality is important, it's equally important to consider the risks facing Tgi Infrastructures at this point in time. For example, we've discovered 4 warning signs that you should run your eye over to get a better picture of Tgi Infrastructures.

This note has only looked at a single factor that sheds light on the nature of Tgi Infrastructures' profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks with significant insider holdings to be useful.

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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.