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.

Stratasys (SSYS)

Trailing 12-Month GAAP Operating Margin: -11.4%

Born from the Founder’s idea of making a toy frog with a glue gun, Stratasys (NASDAQ: SSYS) offers 3D printers and related materials, software, and services to many industries.

Why Do We Pass on SSYS?

1. Sales stagnated over the last five years and signal the need for new growth strategies
2. Poor expense management has led to operating margin losses
3. Cash-burning tendencies make us wonder if it can sustainably generate shareholder value

At $9.46 per share, Stratasys trades at 25.4x forward P/E. Dive into our free research report to see why there are better opportunities than SSYS.

3D Systems (DDD)

Trailing 12-Month GAAP Operating Margin: -63.7%

Founded by the inventor of stereolithography, 3D Systems (NYSE: DDD) engineers, manufactures, and sells 3D printers and other related products to the aerospace, automotive, healthcare, and consumer goods industries.

Why Should You Sell DDD?

1. Sales tumbled by 6.3% annually over the last five years, showing market trends are working against its favor during this cycle
2. Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

3D Systems’s stock price of $2.04 implies a valuation ratio of 1x forward price-to-sales. If you’re considering DDD for your portfolio, see our FREE research report to learn more.

Tandem Diabetes (TNDM)

Trailing 12-Month GAAP Operating Margin: -19.9%

With technology that automatically adjusts insulin delivery based on continuous glucose monitoring data, Tandem Diabetes Care (NASDAQ: TNDM) develops and manufactures automated insulin delivery systems that help people with diabetes manage their blood glucose levels.

Why Do We Steer Clear of TNDM?

1. Disappointing pump shipments over the past two years suggest it might have to lower prices to accelerate growth
2. Earnings per share fell by 21% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

Tandem Diabetes is trading at $10.94 per share, or 13.5x forward EV-to-EBITDA. To fully understand why you should be careful with TNDM, check out our full research report (it’s free).

Stocks We Like More

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