There Might Be More To Rani Zim Shopping Centers' (TLV:RANI) Story Than Just Weak Earnings

Investors were disappointed with Rani Zim Shopping Centers Ltd's (TLV:RANI) recent earnings. We think there is more to the story than simply soft profit numbers. Our analysis shows that there are some other factors of concern.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

One essential aspect of assessing earnings quality is to look at how much a company is diluting shareholders. As it happens, Rani Zim Shopping Centers issued 21% more new shares over the last year. Therefore, each share now receives a smaller portion of profit. Per share metrics like EPS help us understand how much actual shareholders are benefitting from the company's profits, while the net income level gives us a better view of the company's absolute size. You can see a chart of Rani Zim Shopping Centers' EPS by clicking here.

A Look At The Impact Of Rani Zim Shopping Centers' Dilution On Its Earnings Per Share (EPS)

Unfortunately, Rani Zim Shopping Centers' profit is down 65% per year over three years. Even looking at the last year, profit was still down 57%. Sadly, earnings per share fell further, down a full 72% in that time. Therefore, the dilution is having a noteworthy influence on shareholder returns.

In the long term, if Rani Zim Shopping Centers' earnings per share can increase, then the share price should too. However, if its profit increases while its earnings per share stay flat (or even fall) then shareholders might not see much benefit. For the ordinary retail shareholder, EPS is a great measure to check your hypothetical "share" of the company's profit.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Rani Zim Shopping Centers.

How Do Unusual Items Influence Profit?

Alongside that dilution, it's also important to note that Rani Zim Shopping Centers' profit was boosted by unusual items worth ₪38m in the last twelve months. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. 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'. Rani Zim Shopping Centers had a rather significant contribution from unusual items relative to its profit to September 2025. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

Our Take On Rani Zim Shopping Centers' Profit Performance

In its last report Rani Zim Shopping Centers benefitted from unusual items which boosted its profit, which could make the profit seem better than it really is on a sustainable basis. On top of that, the dilution means that its earnings per share performance is worse than its profit performance. Considering all this we'd argue Rani Zim Shopping Centers' profits probably give an overly generous impression of its sustainable level of profitability. 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 example, we've found that Rani Zim Shopping Centers has 5 warning signs (1 can't be ignored!) that deserve your attention before going any further with your analysis.

In this article we've looked at a number of factors that can impair the utility of profit numbers, and we've come away cautious. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.