Weak Statutory Earnings May Not Tell The Whole Story For Israel Shipyards Industries (TLV:ISHI)

A lackluster earnings announcement from Israel Shipyards Industries Ltd (TLV:ISHI) last week didn't sink the stock price. We think that investors are worried about some weaknesses underlying the earnings.

View our latest analysis for Israel Shipyards Industries

The Impact Of Unusual Items On Profit

For anyone who wants to understand Israel Shipyards Industries' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from ₪22m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. Israel Shipyards Industries had a rather significant contribution from unusual items relative to its profit to September 2024. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Israel Shipyards Industries.

Our Take On Israel Shipyards Industries' Profit Performance

As we discussed above, we think the significant positive unusual item makes Israel Shipyards Industries' earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Israel Shipyards Industries' underlying earnings power is lower than its statutory profit. In further bad news, its earnings per share decreased in the last year. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Case in point: We've spotted 2 warning signs for Israel Shipyards Industries you should be aware of.

This note has only looked at a single factor that sheds light on the nature of Israel Shipyards Industries' profit. But there are plenty of other ways to inform your opinion of a company. Some people consider a high return on equity to be a good sign of a quality business. 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.