Neto M.E Holdings (TASE:NTO): Net Profit Margin Rises to 1.7%, Challenging Persistent Bearish Sentiment

Neto M.E Holdings (TASE:NTO) just reported its Q2 2025 results, posting revenue of ₪1.2 billion and EPS of ₪6.27. Looking back, the company has seen revenue swing from ₪1.1 billion in Q1 2024 to ₪1.3 billion in Q1 2025. EPS has ranged between ₪2.68 and ₪9.33 over the past six quarters. Investor focus is now turning to how these latest results shape up in the context of recent margin movements and what they could signal going forward.

See our full analysis for Neto M.E Holdings.

Next up, we will see how these numbers stack up against the consensus stories in the market and whether they reinforce or challenge the prevailing sentiment around Neto M.E Holdings.

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Net Profit Margin Hits 1.7%

• Neto M.E Holdings reported a net profit margin of 1.7% over the past year, an increase from 1.4% previously, based on the most recent trailing twelve month data.
• Despite this margin improvement, analysis highlights that long-term earnings have trended down, declining by an average of 12.9% per year over five years, which stands in direct tension with the company’s recent 30.7% earnings growth.
  • This gap means that while bulls may point to the latest margin uptick as evidence of operational strength, critics would counter that one strong year may not offset a longer-term pattern of decline.
  • If the margin stabilization continues, it could lend meaningful support to the view that recent earnings growth is sustainable, but the data so far suggest sustained caution is warranted.

Valuation Sits Well Below Peers

• Neto M.E Holdings currently trades at a Price-To-Earnings ratio of just 9.6x, undercutting its direct peers at 14.5x, the broader Asian Food industry at 16.6x, and the IL market average of 15.1x.
• Rather than suggesting the shares are undervalued purely on sentiment, the data indicate that the discounted P/E is backed by high reported earnings quality and recent outperformance versus longer-term averages.
  • Supporters of the value case argue this relative discount creates a potential opportunity as long as improved profitability holds, especially as high earnings quality helps ease fears about so-called value traps.
  • However, critics may caution that the low valuation also reflects uncertainty about whether the current upturn can last, given the multi-year record of falling earnings.

Trailing Earnings Growth Outpaces Five-Year Decline

• The company posted trailing twelve month earnings growth of 30.7%, a stark reversal from its prior trend of 12.9% annual decline over five years, highlighting how recent quarters differ sharply from longer-term results.
• While bulls may see the strong one-year growth and margin expansion as a turning point, the data show that this surge is not yet enough to erase concerns about structural earnings challenges, especially as annual growth has swung dramatically before.
  • This sharp contrast between recent momentum and past declines keeps both bullish hopes and long-term risks in focus.
  • If upcoming quarters sustain this level of performance, the company’s narrative could shift further, but for now, the tension between recent growth and the historical trend remains unresolved.

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 M.E Holdings'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

Neto M.E Holdings’ recent uptick in margins and earnings contrasts sharply with its long-term pattern of declining profits, raising questions about consistency and durability.

If you would rather focus on consistency, use stable growth stocks screener (2075 results) to find companies that deliver steady performance with more reliable earnings year after year.

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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