Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
Pilgrim's Pride (PPC)
Trailing 12-Month GAAP Operating Margin: 9.5%
Offering everything from pre-marinated to frozen chicken, Pilgrim’s Pride (NASDAQ: PPC) produces, processes, and distributes chicken products to retailers and food service customers.
Why Does PPC Worry Us?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 2.8% over the last three years was below our standards for the consumer staples sector
- Demand is forecasted to shrink as its estimated sales for the next 12 months are flat
- Gross margin of 11.8% is an output of its commoditized products
At $41.50 per share, Pilgrim's Pride trades at 8.7x forward P/E. Check out our free in-depth research report to learn more about why PPC doesn’t pass our bar.
Rogers (ROG)
Trailing 12-Month GAAP Operating Margin: 4.9%
With roots dating back to 1832, making it one of America's oldest continuously operating companies, Rogers (NYSE: ROG) designs and manufactures specialized engineered materials and components used in electric vehicles, telecommunications, renewable energy, and other high-performance applications.
Why Is ROG Risky?
- Sales were flat over the last five years, indicating it’s failed to expand this cycle
- Performance over the past five years shows each sale was less profitable, as its earnings per share fell by 15.3% annually
- Free cash flow margin shrank by 8.7 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
Rogers is trading at $78.93 per share, or 28x forward P/E. If you’re considering ROG for your portfolio, see our FREE research report to learn more.
First Solar (FSLR)
Trailing 12-Month GAAP Operating Margin: 31.3%
Headquartered in Arizona, First Solar (NASDAQ: FSLR) specializes in manufacturing solar panels and providing photovoltaic solar energy solutions.
Why Does FSLR Fall Short?
- Annual revenue growth of 6.8% over the last five years was below our standards for the industrials sector
- Free cash flow margin dropped by 18.9 percentage points over the last five years, implying the company increased its investment activities to fend off competitors
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
First Solar’s stock price of $223.05 implies a valuation ratio of 11.3x forward P/E. Read our free research report to see why you should think twice about including FSLR in your portfolio.
Stocks We Like More
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