We're Not So Sure You Should Rely on Mordechai Aviv Taasiot Beniyah (1973)'s (TLV:AVIV) Statutory Earnings

Broadly speaking, profitable businesses are less risky than unprofitable ones. However, sometimes companies receive a one-off boost (or reduction) to their profit, and it's not always clear whether statutory profits are a good guide, going forward. Today we'll focus on whether this year's statutory profits are a good guide to understanding Mordechai Aviv Taasiot Beniyah (1973) (TLV:AVIV).

We like the fact that Mordechai Aviv Taasiot Beniyah (1973) made a profit of ₪17.8m on its revenue of ₪190.4m, in the last year. As shown in the chart below, it did manage to grow its revenue over the last three years, although its profit has been pretty flat.

Check out our latest analysis for Mordechai Aviv Taasiot Beniyah (1973)

Not all profits are equal, and we can learn more about the nature of a company's past profitability by diving deeper into the financial statements. This article will discuss how unusual items have impacted Mordechai Aviv Taasiot Beniyah (1973)'s most recent profit results. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Mordechai Aviv Taasiot Beniyah (1973).

How Do Unusual Items Influence Profit?

For anyone who wants to understand Mordechai Aviv Taasiot Beniyah (1973)'s profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from ₪8.7m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. And that's as you'd expect, given these boosts are described as 'unusual'. Mordechai Aviv Taasiot Beniyah (1973) had a rather significant contribution from unusual items relative to its profit to June 2020. 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 Mordechai Aviv Taasiot Beniyah (1973)'s Profit Performance

As previously mentioned, Mordechai Aviv Taasiot Beniyah (1973)'s large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. As a result, we think it may well be the case that Mordechai Aviv Taasiot Beniyah (1973)'s underlying earnings power is lower than its statutory profit. In further bad news, its earnings per share decreased in the last year. 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. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Our analysis shows 5 warning signs for Mordechai Aviv Taasiot Beniyah (1973) (1 shouldn't be ignored!) and we strongly recommend you look at them before investing.

This note has only looked at a single factor that sheds light on the nature of Mordechai Aviv Taasiot Beniyah (1973)'s profit. But there is always more to discover if you are capable of focussing your mind on minutiae. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. 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. 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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