Even if a company is profitable, it doesn’t always mean it’s a great investment. Some struggle to maintain growth, face looming threats, or fail to reinvest wisely, limiting their future potential.
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 is one profitable company that balances growth and profitability and two best left off your watchlist.
Two Stocks to Sell:
Belden (BDC)
Trailing 12-Month GAAP Operating Margin: 11.3%
With its enamel-coated copper wire used in WWI for the Allied forces, Belden (NYSE: BDC) designs, manufactures, and sells electronic components to various industries.
Why Does BDC Give Us Pause?
- Sales were flat over the last two years, indicating it’s failed to expand this cycle
- Anticipated sales growth of 5% for the next year implies demand will be shaky
- Flat earnings per share over the last two years lagged its peers
Belden is trading at $124.49 per share, or 16.6x forward P/E. Dive into our free research report to see why there are better opportunities than BDC.
Interface (TILE)
Trailing 12-Month GAAP Operating Margin: 10.9%
Pioneering carbon-neutral flooring since its founding in 1973, Interface (NASDAQ: TILE) is a global manufacturer of modular carpet tiles, luxury vinyl tile (LVT), and rubber flooring that specializes in carbon-neutral and sustainable flooring solutions.
Why Are We Wary of TILE?
- Annual revenue growth of 1.8% over the last five years was below our standards for the business services sector
- Earnings growth underperformed the sector average over the last five years as its EPS grew by just 1.9% annually
- Below-average returns on capital indicate management struggled to find compelling investment opportunities
At $28.04 per share, Interface trades at 15.6x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including TILE in your portfolio.
One Stock to Watch:
Primoris (PRIM)
Trailing 12-Month GAAP Operating Margin: 5.5%
Listed on the NASDAQ in 2008, Primoris (NYSE: PRIM) builds, maintains, and upgrades infrastructure in the utility, energy, and civil construction industries.
Why Are We Positive On PRIM?
- Annual revenue growth of 15.9% over the last five years was superb and indicates its market share increased during this cycle
- Demand is greater than supply as the company’s 159% average backlog growth over the past two years shows it’s securing new contracts and accumulating more orders than it can fulfill
- Earnings per share have massively outperformed its peers over the last two years, increasing by 28.6% annually
Primoris’s stock price of $130.24 implies a valuation ratio of 28.2x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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