We Think You Can Look Beyond Strauss Group's (TLV:STRS) Lackluster Earnings

Investors were disappointed with the weak earnings posted by Strauss Group Ltd. (TLV:STRS ). While the headline numbers were soft, we believe that investors might be missing some encouraging factors.

View our latest analysis for Strauss Group

How Do Unusual Items Influence Profit?

For anyone who wants to understand Strauss Group's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by ₪50m due to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. If Strauss Group doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Strauss Group's Profit Performance

Unusual items (expenses) detracted from Strauss Group's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Strauss Group's statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back over 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. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. To that end, you should learn about the 3 warning signs we've spotted with Strauss Group (including 1 which is concerning).

Today we've zoomed in on a single data point to better understand the nature of Strauss Group'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 that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.