Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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. Keeping that in mind, here are three profitable companies that don’t make the cut and some better opportunities instead.
Twilio (TWLO)
Trailing 12-Month GAAP Operating Margin: 1.5%
Known for the clever "Twilio Magic" demo that had developers creating functioning communications apps in minutes, Twilio (NYSE: TWLO) provides a platform that enables businesses to communicate with their customers through voice, messaging, email, and other digital channels.
Why Does TWLO Fall Short?
- 11.6% annual revenue growth over the last three years was slower than its software peers
- Estimated sales growth of 8.5% for the next 12 months implies demand will slow from its three-year trend
- Gross margin of 50% reflects its high servicing costs
At $106.40 per share, Twilio trades at 3.3x forward price-to-sales. Dive into our free research report to see why there are better opportunities than TWLO.
Campbell's (CPB)
Trailing 12-Month GAAP Operating Margin: 9.1%
With its iconic canned soup as its cornerstone product, Campbell's (NASDAQ: CPB) is a packaged food company with an illustrious portfolio of brands.
Why Do We Think Twice About CPB?
- Falling unit sales over the past two years indicate demand is soft and that the company may need to revise its product strategy
- Sales are projected to remain flat over the next 12 months as demand decelerates from its three-year trend
- Efficiency has decreased over the last year as its operating margin fell by 3.6 percentage points
Campbell’s stock price of $32.65 implies a valuation ratio of 10.6x forward P/E. If you’re considering CPB for your portfolio, see our FREE research report to learn more.
Integer Holdings (ITGR)
Trailing 12-Month GAAP Operating Margin: 12.5%
With its name reflecting the mathematical term for "whole" or "complete," Integer Holdings (NYSE: ITGR) is a medical device outsource manufacturer that produces components and systems for cardiac, vascular, neurological, and other medical applications.
Why Are We Wary of ITGR?
- Revenue base of $1.79 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Free cash flow margin shrank by 5.3 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
Integer Holdings is trading at $106.79 per share, or 15.8x forward P/E. Read our free research report to see why you should think twice about including ITGR in your portfolio.
Stocks We Like More
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