I.C.P. Israel Citrus Plantations' (TLV:CTPL5) Profits Appear To Have Quality Issues

I.C.P. Israel Citrus Plantations Ltd.'s (TLV:CTPL5) healthy profit numbers didn't contain any surprises for investors. We believe that shareholders have noticed some concerning factors beyond the statutory profit numbers.

View our latest analysis for I.C.P. Israel Citrus Plantations

The Impact Of Unusual Items On Profit

For anyone who wants to understand I.C.P. Israel Citrus Plantations' profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from ₪1.8m worth of unusual items. 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. Which is hardly surprising, given the name. We can see that I.C.P. Israel Citrus Plantations' positive unusual items were quite significant relative to its profit in the year to December 2020. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of I.C.P. Israel Citrus Plantations.

Our Take On I.C.P. Israel Citrus Plantations' Profit Performance

As previously mentioned, I.C.P. Israel Citrus Plantations' large boost from unusual items won't be there indefinitely, so its statutory earnings are probably a poor guide to its underlying profitability. For this reason, we think that I.C.P. Israel Citrus Plantations' statutory profits may be a bad guide to its underlying earnings power, and might give investors an overly positive impression of the company. But the happy news is that, while acknowledging we have to look beyond the statutory numbers, those numbers are still improving, with EPS growing at a very high rate over the last year. 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 4 warning signs for I.C.P. Israel Citrus Plantations (2 are a bit concerning) you should be familiar with.

Today we've zoomed in on a single data point to better understand the nature of I.C.P. Israel Citrus Plantations' 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 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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