Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages. Just because a business is in the green today doesn’t mean it will thrive tomorrow.
Not all profitable companies are created equal, and that’s why we built StockStory - to help you find the ones that truly shine bright. That said, here are three profitable companies that don’t make the cut and some better opportunities instead.
Acushnet (GOLF)
Trailing 12-Month GAAP Operating Margin: 12.4%
Producer of the acclaimed Titleist Pro V1 golf ball, Acushnet (NYSE: GOLF) is a design and manufacturing company specializing in performance-driven golf products.
Why Is GOLF Risky?
- Lackluster 10.1% annual revenue growth over the last five years indicates the company is losing ground to competitors
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Acushnet’s stock price of $84.10 implies a valuation ratio of 21.3x forward P/E. If you’re considering GOLF for your portfolio, see our FREE research report to learn more.
Ameresco (AMRC)
Trailing 12-Month GAAP Operating Margin: 6.8%
Having played a role in upgrading the energy solutions of Alcatraz Island, Ameresco (NYSE: AMRC) provides energy and renewable energy solutions for various sectors.
Why Are We Hesitant About AMRC?
- Gross margin of 16.5% is below its competitors, leaving less money to invest in areas like marketing and R&D
- Cash-burning history makes us doubt the long-term viability of its business model
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
Ameresco is trading at $34.74 per share, or 36.3x forward P/E. Read our free research report to see why you should think twice about including AMRC in your portfolio.
Bio-Techne (TECH)
Trailing 12-Month GAAP Operating Margin: 9%
With a catalog of hundreds of thousands of specialized biological products used in laboratories worldwide, Bio-Techne (NASDAQ: TECH) develops and manufactures specialized reagents, instruments, and services that help researchers study biological processes and enable diagnostic testing and cell therapy development.
Why Do We Pass on TECH?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Smaller revenue base of $1.22 billion means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- 11.6 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
At $64.35 per share, Bio-Techne trades at 31.9x forward P/E. Dive into our free research report to see why there are better opportunities than TECH.
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