Concerns Surrounding Paz Retail And Energy's (TLV:PAZ) Performance

The recent earnings posted by Paz Retail And Energy Ltd. (TLV:PAZ) 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.

See our latest analysis for Paz Retail And Energy

How Do Unusual Items Influence Profit?

Importantly, our data indicates that Paz Retail And Energy's profit received a boost of ₪283m 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. Paz Retail And Energy had a rather significant contribution from unusual items relative to its profit 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 Paz Retail And Energy.

Our Take On Paz Retail And Energy's Profit Performance

As we discussed above, we think the significant positive unusual item makes Paz Retail And Energy's earnings a poor guide to its underlying profitability. For this reason, we think that Paz Retail And Energy's statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. But the good news is that its EPS growth over the last three years has been very impressive. 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. If you'd like to know more about Paz Retail And Energy as a business, it's important to be aware of any risks it's facing. For example - Paz Retail And Energy has 3 warning signs we think you should be aware of.

Today we've zoomed in on a single data point to better understand the nature of Paz Retail And Energy'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. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.