Alrov (TASE:ALRPR) Profitability Recovery Reinforces Bullish Narrative, Shares Trade at 5.1x P/E

Alrov Properties and Lodgings (TASE:ALRPR) has just released its Q3 2025 results, reporting revenue of 633.9 million ILS and basic EPS of 8.81 ILS for the quarter. The company’s trailing twelve month numbers show revenue of 2.7 billion ILS and net income of 1.2 billion ILS, placing earnings and profitability trends under the spotlight for investors keen on the turnaround. Margins caught attention as Alrov’s results offered a snapshot of improved profitability and earnings visibility for the period.

See our full analysis for Alrov Properties and Lodgings.

With these headline numbers on the table, let’s see how Alrov's results measure up against the stories that investors and analysts have built around the stock. We'll dive into how the new data reshapes or reinforces the prevailing narratives.

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Five-Year Profit Growth at 28.6%

• Alrov's average earnings growth rate over the past five years stands at 28.6%, with net income for the last twelve months reaching 1.2 billion ILS.
• With profitability improving and net profit margins now positive, market opinion notes that high earnings quality and sustained performance set Alrov apart, especially as the company shifts from prior losses.
  • Trailing twelve-month net profit margin improvement is reinforced by consistent gains in quarterly net income, such as 181.5 million ILS in Q3 2025 after a negative result just a year ago.
  • Strong multi-year profit expansion supports the view that Alrov’s financial turnaround is genuine rather than a short-lived rebound.

Profit Multiple: 5.1x vs Peers

• Alrov's price-to-earnings (P/E) ratio is 5.1x, which is far below the sector average of 14.2x and the peer average of 36.8x, and less than half the broader Israel market average of 15.4x.
• Analysts highlight that this sharp discount to industry valuation metrics may attract value-focused investors, as trailing net income has climbed above sector norms, yet the share price (291.5 ILS) remains restrained relative to peers.
  • Consensus narrative points to opportunity: shares are seen as undervalued versus sector benchmarks, suggesting market skepticism may be lagging recent earnings momentum.
  • However, the price is noted to be above an estimated DCF fair value (12.14 ILS), adding a layer of caution for purely valuation-driven buyers.

Debt Servicing Remains a Key Risk

• The company’s financial position remains pressured, as its debt is not well covered by operating cash flow according to the latest annual analysis.
• Prevailing market opinion underscores this ongoing risk; despite strong profit growth, limited coverage of debt obligations by operating cash flow leaves the business exposed if borrowing costs rise or cash generation slows.
  • This tension explains why, even with impressive net income, some investors may remain wary of leverage on the balance sheet.
  • Risk and reward tradeoff is front and center for anyone weighing Alrov’s attractively low profit multiple against its debt sustainability challenges.

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 Alrov Properties and Lodgings'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 its rapid earnings growth, Alrov’s weak debt coverage and high leverage expose investors to significant financial stability risks if conditions change.

If you want peace of mind from stronger balance sheets and lower debt risk, check out companies with robust financial health using our solid balance sheet and fundamentals stocks screener (1924 results).

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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