We Think That There Are More Issues For Meshulam Levinstein Contracting & Engineering (TLV:LEVI) Than Just Sluggish Earnings

A lackluster earnings announcement from Meshulam Levinstein Contracting & Engineering Ltd. (TLV:LEVI) last week didn't sink the stock price. We think that investors are worried about some weaknesses underlying the earnings.

Check out our latest analysis for Meshulam Levinstein Contracting & Engineering

How Do Unusual Items Influence Profit?

To properly understand Meshulam Levinstein Contracting & Engineering's profit results, we need to consider the ₪14m gain attributed to 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. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. Assuming those unusual items don't show up again in the current year, we'd thus expect profit to be weaker next year (in the absence of business growth, that is).

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

Our Take On Meshulam Levinstein Contracting & Engineering's Profit Performance

Arguably, Meshulam Levinstein Contracting & Engineering's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that Meshulam Levinstein Contracting & Engineering's statutory profits are better than its underlying earnings power. In further bad news, its earnings per share decreased in the last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. If you'd like to know more about Meshulam Levinstein Contracting & Engineering as a business, it's important to be aware of any risks it's facing. Be aware that Meshulam Levinstein Contracting & Engineering is showing 2 warning signs in our investment analysis and 1 of those is a bit concerning...

Today we've zoomed in on a single data point to better understand the nature of Meshulam Levinstein Contracting & Engineering's profit. But there are plenty of other ways to inform your opinion of a company. 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 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.