Solid Earnings Reflect Mendelson Infrastructures & Industries' (TLV:MNIN) Strength As A Business

Mendelson Infrastructures & Industries Ltd. (TLV:MNIN) recently posted some strong earnings, and the market responded positively. Our analysis found some more factors that we think are good for shareholders.

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Zooming In On Mendelson Infrastructures & Industries' Earnings

In high finance, the key ratio used to measure how well a company converts reported profits into free cash flow (FCF) is the accrual ratio (from cashflow). To get the accrual ratio we first subtract FCF from profit for a period, and then divide that number by the average operating assets for the period. You could think of the accrual ratio from cashflow as the 'non-FCF profit ratio'.

Therefore, it's actually considered a good thing when a company has a negative accrual ratio, but a bad thing if its accrual ratio is positive. While having an accrual ratio above zero is of little concern, we do think it's worth noting when a company has a relatively high accrual ratio. To quote a 2014 paper by Lewellen and Resutek, "firms with higher accruals tend to be less profitable in the future".

For the year to September 2025, Mendelson Infrastructures & Industries had an accrual ratio of -0.10. That implies it has good cash conversion, and implies that its free cash flow solidly exceeded its profit last year. In fact, it had free cash flow of ₪103m in the last year, which was a lot more than its statutory profit of ₪43.0m. Mendelson Infrastructures & Industries' free cash flow actually declined over the last year, which is disappointing, like non-biodegradable balloons.

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

Our Take On Mendelson Infrastructures & Industries' Profit Performance

Mendelson Infrastructures & Industries' accrual ratio is solid, and indicates strong free cash flow, as we discussed, above. Because of this, we think Mendelson Infrastructures & Industries' earnings potential is at least as good as it seems, and maybe even better! And the EPS is up 5.9% over the last twelve months. 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. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Case in point: We've spotted 2 warning signs for Mendelson Infrastructures & Industries you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Mendelson Infrastructures & Industries' 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.