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.
A lack of profits can lead to trouble, but StockStory helps you identify the businesses that stand a chance of making it through. Keeping that in mind, here are three unprofitable companiesthat don’t make the cut and some better opportunities instead.
Bark (BARK)
Trailing 12-Month GAAP Operating Margin: -7.1%
Making a name for itself with the BarkBox, Bark (NYSE: BARK) specializes in subscription-based, personalized pet products.
Why Are We Hesitant About BARK?
- Sluggish trends in its orders suggest customers aren’t adopting its solutions as quickly as the company hoped
- Historical operating losses point to an inefficient cost structure
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 1.3% for the last two years
At $1.19 per share, Bark trades at 92.4x forward price-to-earnings. To fully understand why you should be careful with BARK, check out our full research report (it’s free).
NN (NNBR)
Trailing 12-Month GAAP Operating Margin: -4.8%
Formerly known as Nuturn, NN (NASDAQ: NNBR) provides metal components, bearings, and plastic and rubber components to the automotive, aerospace, medical, and industrial sectors.
Why Should You Dump NNBR?
- Flat sales over the last five years suggest it must find different ways to grow during this cycle
- Sales over the last five years were less profitable as its earnings per share fell by 16.4% annually while its revenue was flat
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
NN is trading at $1.91 per share, or 1.7x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including NNBR in your portfolio.
Alight (ALIT)
Trailing 12-Month GAAP Operating Margin: -3.9%
Born from a corporate spinoff in 2017 to focus on employee experience technology, Alight (NYSE: ALIT) provides human capital management solutions that help companies administer employee benefits, payroll, and workforce management systems.
Why Is ALIT Risky?
- Annual sales declines of 1% for the past five years show its products and services struggled to connect with the market during this cycle
- Earnings per share have contracted by 2.3% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
Alight’s stock price of $5.24 implies a valuation ratio of 8.2x forward price-to-earnings. Check out our free in-depth research report to learn more about why ALIT doesn’t pass our bar.
Stocks We Like More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market 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 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.
