Willy-Food Investments' (TLV:WLFD) Earnings Are Of Questionable Quality

Willy-Food Investments Ltd's (TLV:WLFD) robust earnings report didn't manage to move the market for its stock. We did some digging, and we found some concerning factors in the details.

View 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 ₪13m 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, after all, that's exactly what the accounting terminology implies. Willy-Food Investments had a rather significant contribution from unusual items relative to its profit to June 2024. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

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. As a result, we think it may well be the case that Willy-Food Investments' underlying earnings power is lower than its statutory profit. The good news is that, its earnings per share increased by 23% in the last year. 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 want to do dive deeper into Willy-Food Investments, you'd also look into what risks it is currently facing. For instance, we've identified 4 warning signs for Willy-Food Investments (1 is significant) you should be familiar with.

Today we've zoomed in on a single data point to better understand the nature of Willy-Food Investments' 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 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.