Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.

A business making money today isn’t necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. Keeping that in mind, here are three profitable companies that don’t make the cut and some better opportunities instead.

TEGNA (TGNA)

Trailing 12-Month GAAP Operating Margin: 24.3%

Spun out of Gannett in 2015, TEGNA (NYSE: TGNA) is a media company operating a network of television stations and digital platforms, focusing on local news and community content.

Why Is TGNA Risky?

1. Products and services aren't resonating with the market as its revenue declined by 2.5% annually over the last two years
2. Forecasted revenue decline of 8.5% for the upcoming 12 months implies demand will fall even further
3. Capital intensity will likely increase as its free cash flow margin is anticipated to drop by 4.5 percentage points over the next year

At $21.08 per share, TEGNA trades at 11.3x forward P/E. Read our free research report to see why you should think twice about including TGNA in your portfolio.

Accel Entertainment (ACEL)

Trailing 12-Month GAAP Operating Margin: 7.5%

Established in Illinois, Accel Entertainment (NYSE: ACEL) is a provider of electronic gaming machines and interactive amusement terminals to bars and entertainment venues.

Why Do We Think Twice About ACEL?

1. Sluggish trends in its video gaming terminals sold suggest customers aren’t adopting its solutions as quickly as the company hoped
2. Anticipated sales growth of 6.4% for the next year implies demand will be shaky
3. Poor free cash flow margin of 3.8% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends

Accel Entertainment’s stock price of $11.62 implies a valuation ratio of 12.2x forward P/E. To fully understand why you should be careful with ACEL, check out our full research report (it’s free).

Ball (BALL)

Trailing 12-Month GAAP Operating Margin: 7.9%

Started with a $200 loan in 1880, Ball (NYSE: BLL) manufactures aluminum packaging for beverages, personal care, and household products as well as aerospace systems and other technologies.

Why Are We Out on BALL?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. High input costs result in an inferior gross margin of 21.6% that must be offset through higher volumes
3. Low free cash flow margin of -0.6% for the last five years gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

Ball is trading at $53.32 per share, or 14.2x forward P/E. If you’re considering BALL for your portfolio, see our FREE research report to learn more.

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