The stock was sluggish on the back of B.O.S. Better Online Solutions Ltd.'s (NASDAQ:BOSC) recent earnings report. Our analysis suggests that there are some reasons for hope that investors should be aware of.

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How Do Unusual Items Influence Profit?

Importantly, our data indicates that B.O.S. Better Online Solutions' profit was reduced by US$1.2m, due to unusual items, over the last year. 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 that's hardly a surprise given these line items are considered unusual. In the twelve months to December 2024, B.O.S. Better Online Solutions had a big unusual items expense. As a result, we can surmise that the unusual items made its statutory profit significantly weaker 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 B.O.S. Better Online Solutions .

An Unusual Tax Situation

Having already discussed the impact of the unusual items, we should also note that B.O.S. Better Online Solutions received a tax benefit of US$1m. This is meaningful because companies usually pay tax rather than receive tax benefits. Of course, prima facie it's great to receive a tax benefit. However, our data indicates that tax benefits can temporarily boost statutory profit in the year it is booked, but subsequently profit may fall back. In the likely event the tax benefit is not repeated, we'd expect to see its statutory profit levels drop, at least in the absence of strong growth.

Our Take On B.O.S. Better Online Solutions' Profit Performance

In its last report B.O.S. Better Online Solutions received a tax benefit which might make its profit look better than it really is on a underlying level. But on the other hand, it also saw an unusual item depress its profit. Considering the aforementioned, we think that B.O.S. Better Online Solutions' profits are probably a reasonable reflection of its underlying profitability; although we'd be confident in that conclusion if we saw a cleaner set of results. If you want to do dive deeper into B.O.S. Better Online Solutions, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 2 warning signs with B.O.S. Better Online Solutions , and understanding these should be part of your investment process.

Our examination of B.O.S. Better Online Solutions has focussed on certain factors that can make its earnings look better than they are. 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 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.