Unprofitable companies face headwinds as they struggle to keep operating expenses under control. Some may be investing heavily, but the majority fail to convert spending into sustainable growth.
Unprofitable companies face an uphill battle, but not all are created equal. Luckily for you, StockStory is here to separate the promising ones from the weak. That said, here are three unprofitable companiesthat don’t make the cut and some better opportunities instead.
Amtech (ASYS)
Trailing 12-Month GAAP Operating Margin: -7.7%
Focusing on the silicon carbide and power semiconductor sectors, Amtech Systems (NASDAQ: ASYS) produces the machinery and related chemicals needed for manufacturing semiconductors.
Why Do We Think ASYS Will Underperform?
- Sales tumbled by 15.8% annually over the last two years, showing market trends are working against its favor during this cycle
- Persistent operating margin losses suggest the business manages its expenses poorly
- Issuance of new shares over the last five years caused its earnings per share to fall by 17.8% annually while its revenue grew
Amtech’s stock price of $8.09 implies a valuation ratio of 62.3x forward P/E. Read our free research report to see why you should think twice about including ASYS in your portfolio.
SmartRent (SMRT)
Trailing 12-Month GAAP Operating Margin: -49.9%
Founded by an employee at a real estate rental company, SmartRent (NYSE: SMRT) provides smart home devices and software for multifamily residential properties, single-family rental homes, and student housing communities.
Why Does SMRT Give Us Pause?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 13.2% annually over the last two years
- Poor expense management has led to operating margin losses
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
SmartRent is trading at $1.36 per share, or 1.6x forward price-to-sales. To fully understand why you should be careful with SMRT, check out our full research report (it’s free for active Edge members).
Exact Sciences (EXAS)
Trailing 12-Month GAAP Operating Margin: -34.5%
With a mission to detect cancer earlier when it's more treatable, Exact Sciences (NASDAQ: EXAS) develops and markets cancer screening and diagnostic tests, including its flagship Cologuard stool-based colorectal cancer screening test.
Why Does EXAS Worry Us?
- Negative free cash flow raises questions about the return timeline for its investments
- Negative returns on capital show that some of its growth strategies have backfired
At $63.90 per share, Exact Sciences trades at 86.6x forward P/E. Dive into our free research report to see why there are better opportunities than EXAS.
Stocks We Like More
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