Stock Analysis

Meshulam Levinstein Contracting & Engineering Ltd.'s (TLV:LEVI) Shares Climb 27% But Its Business Is Yet to Catch Up

TASE:LEVI
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The Meshulam Levinstein Contracting & Engineering Ltd. (TLV:LEVI) share price has done very well over the last month, posting an excellent gain of 27%. The last 30 days bring the annual gain to a very sharp 91%.

After such a large jump in price, given close to half the companies in Israel have price-to-earnings ratios (or "P/E's") below 16x, you may consider Meshulam Levinstein Contracting & Engineering as a stock to avoid entirely with its 59.2x P/E ratio. However, the P/E might be quite high for a reason and it requires further investigation to determine if it's justified.

As an illustration, earnings have deteriorated at Meshulam Levinstein Contracting & Engineering over the last year, which is not ideal at all. One possibility is that the P/E is high because investors think the company will still do enough to outperform the broader market in the near future. If not, then existing shareholders may be quite nervous about the viability of the share price.

View our latest analysis for Meshulam Levinstein Contracting & Engineering

pe-multiple-vs-industry
TASE:LEVI Price to Earnings Ratio vs Industry July 4th 2025
Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Meshulam Levinstein Contracting & Engineering will help you shine a light on its historical performance.
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What Are Growth Metrics Telling Us About The High P/E?

In order to justify its P/E ratio, Meshulam Levinstein Contracting & Engineering would need to produce outstanding growth well in excess of the market.

If we review the last year of earnings, dishearteningly the company's profits fell to the tune of 22%. The last three years don't look nice either as the company has shrunk EPS by 88% in aggregate. So unfortunately, we have to acknowledge that the company has not done a great job of growing earnings over that time.

Comparing that to the market, which is predicted to deliver 9.1% growth in the next 12 months, the company's downward momentum based on recent medium-term earnings results is a sobering picture.

With this information, we find it concerning that Meshulam Levinstein Contracting & Engineering is trading at a P/E higher than the market. Apparently many investors in the company are way more bullish than recent times would indicate and aren't willing to let go of their stock at any price. There's a very good chance existing shareholders are setting themselves up for future disappointment if the P/E falls to levels more in line with the recent negative growth rates.

The Final Word

Meshulam Levinstein Contracting & Engineering's P/E is flying high just like its stock has during the last month. While the price-to-earnings ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of earnings expectations.

Our examination of Meshulam Levinstein Contracting & Engineering revealed its shrinking earnings over the medium-term aren't impacting its high P/E anywhere near as much as we would have predicted, given the market is set to grow. When we see earnings heading backwards and underperforming the market forecasts, we suspect the share price is at risk of declining, sending the high P/E lower. If recent medium-term earnings trends continue, it will place shareholders' investments at significant risk and potential investors in danger of paying an excessive premium.

Don't forget that there may be other risks. For instance, we've identified 4 warning signs for Meshulam Levinstein Contracting & Engineering (2 are a bit unpleasant) you should be aware of.

Of course, you might also be able to find a better stock than Meshulam Levinstein Contracting & Engineering. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.

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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.