The low valuation multiples for value stocks provide a margin of safety that growth stocks rarely offer. However, the challenge lies in determining whether these cheap assets are genuinely undervalued or simply on sale due to their potentially deteriorating business models.
Separating the winners from the value traps is a tough challenge, and that’s where StockStory comes in. Our job is to find you high-quality companies that will stand the test of time. That said, here are three value stocks with little support and some other investments you should consider instead.
Sprinklr (CXM)
Forward P/S Ratio: 2.4x
With a proprietary AI engine processing 450 million data points daily across 30+ digital channels, Sprinklr (NYSE: CXM) provides cloud-based software that helps large enterprises manage customer experiences across social, messaging, chat, and voice channels.
Why Do We Steer Clear of CXM?
- Average billings growth of 3.1% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
- Estimated sales growth of 4.3% for the next 12 months implies demand will slow from its two-year trend
- Operating margin failed to increase over the last year, indicating the company couldn’t optimize its expenses
Sprinklr is trading at $7.80 per share, or 2.4x forward price-to-sales. Dive into our free research report to see why there are better opportunities than CXM.
Bloomin' Brands (BLMN)
Forward P/E Ratio: 7.3x
Owner of the iconic Australian-themed Outback Steakhouse, Bloomin’ Brands (NASDAQ: BLMN) is a leading American restaurant company that owns and operates a portfolio of popular restaurant brands.
Why Is BLMN Risky?
- Poor same-store sales performance over the past two years indicates it’s having trouble bringing new diners into its restaurants
- Sales are projected to tank by 2.4% over the next 12 months as demand evaporates further
- 6× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Bloomin' Brands’s stock price of $7.70 implies a valuation ratio of 7.3x forward P/E. Read our free research report to see why you should think twice about including BLMN in your portfolio.
American Woodmark (AMWD)
Forward P/E Ratio: 14x
Starting as a small millwork shop, American Woodmark (NASDAQ: AMWD) is a cabinet manufacturing company that helps customers from inspiration to installation.
Why Do We Avoid AMWD?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 9.6% annually over the last two years
- Forecasted revenue decline of 3.1% for the upcoming 12 months implies demand will fall even further
- Earnings per share have contracted by 1.3% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
At $64.89 per share, American Woodmark trades at 14x forward P/E. To fully understand why you should be careful with AMWD, check out our full research report (it’s free for active Edge members).
Stocks We Like More
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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