We Think That There Are More Issues For CI Systems (Israel) (TLV:CISY) Than Just Sluggish Earnings

CI Systems (Israel) Ltd.'s (TLV:CISY) recent weak earnings report didn't cause a big stock movement. We think that investors are worried about some weaknesses underlying the earnings.

View our latest analysis for CI Systems (Israel)

The Impact Of Unusual Items On Profit

To properly understand CI Systems (Israel)'s profit results, we need to consider the US$84k gain attributed to unusual items. We can't deny that higher profits generally leave us optimistic, but we'd prefer it if the profit were to be sustainable. 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'. If CI Systems (Israel) doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of CI Systems (Israel).

Our Take On CI Systems (Israel)'s Profit Performance

We'd posit that CI Systems (Israel)'s statutory earnings aren't a clean read on ongoing productivity, due to the large unusual item. Because of this, we think that it may be that CI Systems (Israel)'s statutory profits are better than its underlying earnings power. Sadly, its EPS was down over the last twelve months. 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. If you want to do dive deeper into CI Systems (Israel), you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 3 warning signs with CI Systems (Israel), and understanding them should be part of your investment process.

Today we've zoomed in on a single data point to better understand the nature of CI Systems (Israel)'s 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. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks with significant insider holdings to be useful.

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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.