While profitability is essential, it doesn’t guarantee long-term success. Some companies that rest on their margins will lose ground as competition intensifies - as Jeff Bezos said, "Your margin is my opportunity".

Not all profitable companies are created equal, and that’s why we built StockStory - to help you find the ones that truly shine bright. That said, here are three profitable companies that don’t make the cut and some better opportunities instead.

Bruker (BRKR)

Trailing 12-Month GAAP Operating Margin: 2%

With roots dating back to the pioneering days of nuclear magnetic resonance technology, Bruker (NASDAQ: BRKR) develops and manufactures high-performance scientific instruments that enable researchers and industrial analysts to explore materials at microscopic, molecular, and cellular levels.

Why Does BRKR Give Us Pause?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
2. Costs have risen faster than its revenue over the last five years, causing its adjusted operating margin to decline by 6.8 percentage points
3. Diminishing returns on capital suggest its earlier profit pools are drying up

At $38.00 per share, Bruker trades at 20x forward P/E. Dive into our free research report to see why there are better opportunities than BRKR.

ePlus (PLUS)

Trailing 12-Month GAAP Operating Margin: 7.1%

Starting as a financing company in 1990 before evolving into a full-service technology provider, ePlus (NASDAQ: PLUS) provides comprehensive IT solutions, professional services, and financing options to help organizations optimize their technology infrastructure and supply chain processes.

Why Does PLUS Worry Us?

1. 4.4% annual revenue growth over the last two years was slower than its business services peers
2. Performance over the past two years shows its incremental sales were less profitable as its earnings per share were flat
3. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 3.5% for the last five years

ePlus’s stock price of $82.06 implies a valuation ratio of 15.4x forward P/E. To fully understand why you should be careful with PLUS, check out our full research report (it’s free).

Stifel (SF)

Trailing 12-Month GAAP Operating Margin: 16.3%

Tracing its roots back to 1890 when the firm was established in St. Louis, Stifel Financial (NYSE: SF) is a financial services firm that provides wealth management, investment banking, and institutional brokerage services to individuals, corporations, and institutions.

Why Do We Think Twice About SF?

1. Earnings growth underperformed the sector average over the last five years as its EPS grew by just 8.2% annually
2. Muted 4.4% annual book value per share growth over the last two years shows its capital generation lagged behind its financials peers

Stifel is trading at $118.75 per share, or 12.8x forward P/E. Check out our free in-depth research report to learn more about why SF doesn’t pass our bar.

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