There May Be Underlying Issues With The Quality Of Willy-Food Investments' (TLV:WLFD) Earnings

Despite posting some strong earnings, the market for Willy-Food Investments Ltd's (TLV:WLFD) stock hasn't moved much. We did some digging, and we found some concerning factors in the details.

See our latest analysis for Willy-Food Investments

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Willy-Food Investments' profit received a boost of ₪18m in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And that's as you'd expect, given these boosts are described as 'unusual'. We can see that Willy-Food Investments' positive unusual items were quite significant relative to its profit in the year to December 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 Willy-Food Investments.

Our Take On Willy-Food Investments' Profit Performance

As previously mentioned, Willy-Food Investments' large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. For this reason, we think that Willy-Food Investments' statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. The silver lining is that its EPS growth over the last year has been really wonderful, even if it's not a perfect measure. 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 Willy-Food Investments as a business, it's important to be aware of any risks it's facing. For instance, we've identified 4 warning signs for Willy-Food Investments (1 is significant) you should be familiar with.

This note has only looked at a single factor that sheds light on the nature of Willy-Food Investments' profit. But there is always more to discover if you are capable of focussing your mind on minutiae. 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 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.