Clal Insurance (TASE:CLIS) Net Profit Margins Drop to 3.3%, Undermining Justification for Premium Valuation

Clal Insurance Enterprises Holdings (TASE:CLIS) just released its Q3 2025 results, posting a total revenue of ₪4.5 billion and net income of ₪592 million, with basic EPS coming in at ₪7.41. Looking at earlier quarters, revenue has ranged from ₪3.5 billion to ₪8.0 billion over recent periods, while EPS has shifted from ₪1.62 up to ₪7.68, reflecting how earnings have fluctuated from quarter to quarter. Margins have been under the spotlight, as investors watch for signs of stabilization or further compression in profitability.

See our full analysis for Clal Insurance Enterprises Holdings.

Next up, we will see how this latest set of numbers weighs against the prevailing narratives and expectations around Clal’s performance.

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Net Profit Margins Dip from 5.7% to 3.3%

• Net profit margins for the last twelve months fell to 3.3%, down from 5.7% in the prior year, pointing to tighter profitability even as revenue figures fluctuated between $3.5 billion and $8.0 billion in recent quarters.
• Market analysis highlights how this squeeze reflects sector-wide margin pressures and supports the prevailing view that Clal’s strong track record, including 3.4% annualized earnings growth over five years, is facing near-term headwinds.
  • The company’s ability to sustain earnings is being monitored since net income has shown negative growth in the most recent year.
  • The consensus narrative notes that investors may weigh long-term stability and earnings quality against the recent compression in margins and the challenge of maintaining premium valuation amid industry pressures.

For a full picture, see how margin trends play into the latest consensus on Clal's investment story. 📊 Read the full Clal Insurance Enterprises Holdings Consensus Narrative.

Premium Valuation: P/E at 16.4x vs. Industry 11.1x

• Clal’s current price-to-earnings ratio sits at 16.4x, noticeably above both the industry average of 11.1x and key peer average of 13.2x. The stock trades at ₪187.90, which is significantly higher than its DCF fair value of ₪66.64.
• Prevailing market opinion points out that this valuation gap creates a tension. While the company is diversified and considered resilient, the premium price tag can be difficult to justify now that margins and annual profit growth have both declined.
  • Bulls may have previously justified a premium based on consistent earnings expansion, but with negative growth and shrinking margins, critics question whether the price still aligns with the earnings profile.
  • Some investors now focus on whether recent profitability declines signal a need for caution about sustaining such a premium above fair value.

Interest Payments Highlight Financial Risk

• Coverage of interest payments by earnings remains a flagged risk, as recent data shows interest is not well covered. This adds another point of pressure on financial stability in addition to margin erosion.
• While the diversified revenue base and five-year growth rate are positives, prevailing analysis emphasizes the risk side. Exposed leverage means Clal could be more sensitive to shocks or sustained profit drops than peers with stronger interest coverage.
  • Critics argue that more volatile share performance and weaker interest cover make Clal’s current financial risk level an area to watch closely.
  • Stability in the broader Israeli market does not fully offset these company-specific financial challenges from a fundamental perspective.

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 Clal Insurance Enterprises 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

Clal’s premium valuation looks increasingly hard to justify as profit margins tighten and its interest coverage reveals deeper financial vulnerability compared to peers.

If you’re concerned about those warning signs, tap into solid balance sheet and fundamentals stocks screener (1931 results) to target companies with healthier balance sheets and less financial risk built in.

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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