Nawi Group (TASE:NAWI) Net Profit Margin Drops to 69.9%, Challenging Bullish Profitability Narratives

Nawi Group (TASE:NAWI) has just released its Q3 2025 results, posting total revenue of ₪59.78 million and basic EPS of ₪1.24. Looking back, the company’s revenues ranged from ₪49.13 million in Q1 2024 to ₪61.79 million in Q4 2024. EPS during these quarters has held between ₪1.05 and ₪1.32. With net profit margins showing signs of compression, this latest report sets the stage for a closer look at the company’s ability to sustain its profitability.

See our full analysis for Nawi Group.

Next up, we will examine how these latest numbers compare to the current market narratives and analyst expectations, highlighting where opinions align and where surprises may be present.

Curious how numbers become stories that shape markets? Explore Community Narratives

Net Profit Margin Above Sector, But Down From Last Year

• Nawi Group posted a net profit margin of 69.9% over the last twelve months, still strong compared to the Asian Consumer Finance industry but a drop from the previous year’s 71.7%.
• What stands out is that despite this margin compression, the company’s margins remain among the highest in its sector, which challenges the view that profitability is under immediate threat.
  • While the margin decline is visible, the long-term average margin remains robust and continues to outpace peers.
  • This stability heavily supports investor confidence in Nawi’s profit quality and underlying business model, even as efficiency shows minor slippage.

Share Price Exceeds DCF Fair Value Signal

• The current share price of ₪51.81 trades above the estimated DCF fair value of ₪43.71, suggesting the stock commands a premium over valuation models.
• According to prevailing analysis, this points to a mixed narrative: the company’s above-average Price-To-Earnings ratio of 10.4x is below broader market and industry averages, yet above its direct peers, which potentially reflects a value premium for its solid growth record.
  • P/E of 10.4x compares favorably against the Israeli market average of 15.1x and industry average of 15x, but appears rich relative to the direct peer average of 9.2x for similar local lenders.
  • The premium over DCF fair value and relative peer valuation indicates that investors may be pricing in strong historic growth rather than future acceleration, so the narrative remains balanced between opportunity and caution.

Dividend Yield Stands Out, But Payout Sustainability in Question

• The dividend yield was 4.75% over the most recent twelve months, a notable figure for the sector, yet free cash flows did not fully cover the payout, raising sustainability risks.
• Bulls might focus on the appealing yield, while critics highlight that Nawi’s debt is not well covered by operating cash flow, which introduces a real risk to both future capital returns and balance sheet resilience.
  • Debt coverage concerns signal that without improved operating cash generation, the company’s strong dividends could be at risk if profitability softens any further.
  • High yields alone may not offset worries about long-term payout capacity, especially as margins compress and debt servicing remains a key headwind.

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Nawi Group's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

Nawi Group’s attractive yield is undermined by dividend sustainability concerns and weak debt coverage, which point to real risks for future capital returns. If you want to sidestep these payout and balance sheet worries, discover companies with healthier finances and reliable returns through our solid balance sheet and fundamentals stocks screener (1938 results).

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.

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