Levinstein Properties' (TLV:LVPR) Soft Earnings Don't Show The Whole Picture

Soft earnings didn't appear to concern Levinstein Properties Ltd's (TLV:LVPR) shareholders over the last week. Our analysis suggests that while the profits are soft, the foundations of the business are strong.

See our latest analysis for Levinstein Properties

How Do Unusual Items Influence Profit?

To properly understand Levinstein Properties' profit results, we need to consider the ₪8.9m expense attributed 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. Assuming those unusual expenses don't come up again, we'd therefore expect Levinstein Properties to produce a higher profit next year, all else being equal.

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

Our Take On Levinstein Properties' Profit Performance

Because unusual items detracted from Levinstein Properties' earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Levinstein Properties' statutory profit actually understates its earnings potential! On the other hand, its EPS actually shrunk in the last twelve months. 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. In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. For instance, we've identified 3 warning signs for Levinstein Properties (1 can't be ignored) you should be familiar with.

Today we've zoomed in on a single data point to better understand the nature of Levinstein Properties' 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 with high insider ownership.

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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.