Shareholders appeared unconcerned with Prashkovsky Investments and Construction Ltd.’s (TLV:PRSK) lackluster earnings report last week. Our analysis suggests that while the profits are soft, the foundations of the business are strong.
Check out our latest analysis for Prashkovsky Investments and Construction
The Impact Of Unusual Items On Profit
To properly understand Prashkovsky Investments and Construction’s profit results, we need to consider the ₪19m expense attributed to unusual items. It’s never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that’s exactly what the accounting terminology implies. Assuming those unusual expenses don’t come up again, we’d therefore expect Prashkovsky Investments and Construction to produce a higher profit next year, all else being equal.
Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of Prashkovsky Investments and Construction.
Our Take On Prashkovsky Investments and Construction’s Profit Performance
Because unusual items detracted from Prashkovsky Investments and Construction’s earnings over the last year, you could argue that we can expect an improved result in the current quarter. Based on this observation, we consider it likely that Prashkovsky Investments and Construction’s statutory profit actually understates its earnings potential! Unfortunately, though, its earnings per share actually fell back 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. With this in mind, we wouldn’t consider investing in a stock unless we had a thorough understanding of the risks. Our analysis shows 3 warning signs for Prashkovsky Investments and Construction (1 is a bit unpleasant!) 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 Prashkovsky Investments and Construction’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 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.
