The recent earnings posted by Bikurey Hasade (Holdings) Ltd (TLV:BKRY) were solid, but the stock didn't move as much as we expected. However the statutory profit number doesn't tell the whole story, and we have found some factors which might be of concern to shareholders.
The Impact Of Unusual Items On Profit
For anyone who wants to understand Bikurey Hasade (Holdings)'s profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from ₪55m worth of unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And that's as you'd expect, given these boosts are described as 'unusual'. We can see that Bikurey Hasade (Holdings)'s positive unusual items were quite significant relative to its profit in the year to March 2021. 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 Bikurey Hasade (Holdings).
Our Take On Bikurey Hasade (Holdings)'s Profit Performance
As previously mentioned, Bikurey Hasade (Holdings)'s 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 Bikurey Hasade (Holdings)'s underlying earnings power is lower than its statutory profit. But the good news is that its EPS growth over the last three years has been very impressive. 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. If you'd like to know more about Bikurey Hasade (Holdings) as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 2 warning signs for Bikurey Hasade (Holdings) and we think they deserve your attention.
This note has only looked at a single factor that sheds light on the nature of Bikurey Hasade (Holdings)'s 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. 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 that insiders are buying to be useful.
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This article by Simply Wall St is general in nature. 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.
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