Neto Malinda (TASE:NTML) Net Margin Surges to 4.6%, Reinforcing Bullish Profitability Narratives

Neto Malinda Trading (TASE:NTML) just posted its Q2 2025 results, with total revenue of ₪1.2 billion and basic EPS of ₪2.55. Over the past year, the company has seen revenue grow from ₪4.6 billion to ₪4.9 billion, alongside EPS rising from ₪6.65 to ₪11.32. With margins moving higher and profits stepping up, investors are likely paying close attention to what is driving this momentum.

See our full analysis for Neto Malinda Trading.

Now, let’s see how these results compare to the shared narratives around NTML. Some market views may get reinforced, while others might not hold up to the fresh data.

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Net Profit Margin Jumps to 4.6%

• Net profit margin climbed to 4.6% over the last year, up from 2.9% the year before, reflecting a strengthening in profitability beyond what is typical for NTML.
• Notably, margin expansion occurred alongside 71% annual earnings growth, both considered high quality due to improved operational efficiency and profitability as seen in rising net profit margins and EPS.
  • This margin expansion supports claims about NTML’s ability to achieve ongoing profit gains, especially when compared to the trailing 5-year average earnings growth of only 2.2%.
  • Another factor is the increase in Net Income (Excluding Extra Items) for the trailing 12 months, which reached 225.0 million ILS compared to 131.6 million ILS a year earlier, suggesting that profitability improvements are being maintained.

P/E Ratio Outshines Industry Peers

• NTML’s latest Price-to-Earnings (P/E) ratio was 13.1x, lower than the Asian Food sector (16.6x), its peer group (16.9x), and the broader IL market (15.1x), indicating a relative value advantage.
• Consensus market opinion notes this below-average P/E ratio makes NTML appear attractively valued compared to direct competitors, though the current share price (₪149) remains significantly above DCF fair value (₪63.80).
  • Analysts weigh the strong performance in margins and bottom-line growth against the market’s premium price, highlighting that valuation remains a key consideration for investors despite the company's operational strength.
  • This comparison challenges straightforward value claims. While the P/E is attractive, investors may wait until the gap between share price and fair value narrows.

Earnings Growth Outpaces Long-Term Average

• Earnings grew 71% over the past twelve months, well above the five-year average growth rate of 2.2%, indicating a significant increase in operating strength.
• Current market view attributes this spike to a combination of margin gains and strong revenue momentum, reflecting a period of performance not often seen in NTML’s recent history.
  • This pace of improvement brings questions about sustainability, with no new risk flags cited this year, leaving investors to consider whether the momentum will continue.
  • The resilience of such accelerated growth is likely to influence sentiment in upcoming results, as comparables may become more challenging for future periods.

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 Neto Malinda Trading'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.

Explore Alternatives

Despite NTML’s impressive growth and margin gains, its share price remains far above fair value estimates. This raises concerns about potential overvaluation risk.

If you’d like to focus on opportunities supported by more attractive pricing, check out these 920 undervalued stocks based on cash flows to discover companies trading below their intrinsic value right now.

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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