Rapac Communication & Infrastructure's (TLV:RPAC) Strong Earnings Are Of Good Quality

Rapac Communication & Infrastructure Ltd's (TLV:RPAC) strong earnings report was rewarded with a positive stock price move. Our analysis found some more factors that we think are good for shareholders.

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How Do Unusual Items Influence Profit?

For anyone who wants to understand Rapac Communication & Infrastructure's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₪158m 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. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. In the twelve months to March 2025, Rapac Communication & Infrastructure 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 Rapac Communication & Infrastructure.

Our Take On Rapac Communication & Infrastructure's Profit Performance

As we discussed above, we think the significant unusual expense will make Rapac Communication & Infrastructure's statutory profit lower than it would otherwise have been. Because of this, we think Rapac Communication & Infrastructure's underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! And it's also positive that the company showed enough improvement to book a profit this year, after losing money 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. 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. When we did our research, we found 2 warning signs for Rapac Communication & Infrastructure (1 is concerning!) that we believe deserve your full attention.

Today we've zoomed in on a single data point to better understand the nature of Rapac Communication & Infrastructure's 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. 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.