Hiron-Trade Investments & Industrial Buildings' (TLV:HRON) Problems Go Beyond Weak Profit

A lackluster earnings announcement from Hiron-Trade Investments & Industrial Buildings Ltd (TLV:HRON) last week didn't sink the stock price. We think that investors are worried about some weaknesses underlying the earnings.

See our latest analysis for Hiron-Trade Investments & Industrial Buildings

The Impact Of Unusual Items On Profit

Importantly, our data indicates that Hiron-Trade Investments & Industrial Buildings' profit received a boost of ₪34m in unusual items, over the last year. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. Hiron-Trade Investments & Industrial Buildings had a rather significant contribution from unusual items relative to its profit to December 2023. All else being equal, this would likely have the effect of making the statutory profit a poor guide to underlying earnings power.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Hiron-Trade Investments & Industrial Buildings.

Our Take On Hiron-Trade Investments & Industrial Buildings' Profit Performance

As we discussed above, we think the significant positive unusual item makes Hiron-Trade Investments & Industrial Buildings' earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Hiron-Trade Investments & Industrial Buildings' underlying earnings power is lower than its statutory profit. Nonetheless, it's still worth noting that its earnings per share have grown at 25% over the last three years. 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. If you want to do dive deeper into Hiron-Trade Investments & Industrial Buildings, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 1 warning sign for Hiron-Trade Investments & Industrial Buildings you should know about.

This note has only looked at a single factor that sheds light on the nature of Hiron-Trade Investments & Industrial Buildings' profit. But there are plenty of other ways to inform your opinion of a company. 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.