Rimoni Industries (TLV:RIMO) Posted Healthy Earnings But There Are Some Other Factors To Be Aware Of

Rimoni Industries Ltd. (TLV:RIMO) just reported some strong earnings, and the market rewarded them with a positive share price move. However, we think that shareholders may be missing some concerning details in the numbers.

View our latest analysis for Rimoni Industries

How Do Unusual Items Influence Profit?

For anyone who wants to understand Rimoni Industries' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from ₪15m worth of unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's as you'd expect, given these boosts are described as 'unusual'. Rimoni Industries had a rather significant contribution from unusual items relative to its profit to September 2021. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Rimoni Industries.

Our Take On Rimoni Industries' Profit Performance

As we discussed above, we think the significant positive unusual item makes Rimoni Industries' earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Rimoni Industries' underlying earnings power is lower than its statutory profit. But at least holders can take some solace from the 31% per annum growth in EPS for the last three. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you want to do dive deeper into Rimoni Industries, you'd also look into what risks it is currently facing. While conducting our analysis, we found that Rimoni Industries has 2 warning signs and it would be unwise to ignore these.

Today we've zoomed in on a single data point to better understand the nature of Rimoni Industries' profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. 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.

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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.