3 Value Stocks with Questionable Fundamentals

October 06, 2025 at 00:36 AM EDT

FIVN Cover Image

Value stocks typically trade at discounts to the broader market, offering patient investors the opportunity to buy businesses when they’re out of favor. The key risk, however, is that these stocks are usually cheap for a reason – five cents for a piece of fruit may seem like a great deal until you find out it’s rotten.

Separating the winners from the value traps is a tough challenge, and that’s where StockStory comes in. Our job is to find you high-quality companies that will stand the test of time. Keeping that in mind, here are three value stocks with little support and some other investments you should consider instead.

Five9 (FIVN)

Forward P/S Ratio: 1.7x

Taking its name from the "five nines" (99.999%) standard for optimal service reliability in telecommunications, Five9 (NASDAQ: FIVN) provides cloud-based software that enables businesses to run their contact centers with tools for customer service, sales, and marketing across multiple communication channels.

Why Are We Wary of FIVN?

Average billings growth of 13.6% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
Estimated sales growth of 8.2% for the next 12 months implies demand will slow from its two-year trend
Gross margin of 55.3% is way below its competitors, leaving less money to invest in areas like marketing and R&D

Five9 is trading at $22.86 per share, or 1.7x forward price-to-sales. If you’re considering FIVN for your portfolio, see our FREE research report to learn more.

Shutterstock (SSTK)

Forward EV/EBITDA Ratio: 4x

Originally featuring a library that included many of founder Jon Oringer’s photos, Shutterstock (NYSE: SSTK) is now a digital platform where customers can license and use hundreds of millions of pieces of content.

Why Does SSTK Worry Us?

Focus on expanding its platform came at the expense of monetization as its average revenue per request fell by 5.4% annually
Estimated sales growth of 1.6% for the next 12 months implies demand will slow from its three-year trend
Capital intensity has ramped up over the last few years as its free cash flow margin decreased by 16.5 percentage points

Shutterstock’s stock price of $22.25 implies a valuation ratio of 4x forward EV/EBITDA. Read our free research report to see why you should think twice about including SSTK in your portfolio.

First Merchants (FRME)

Forward P/B Ratio: 0.9x

Dating back to 1893 when it first opened its doors in Indiana, First Merchants (NASDAQ: FRME) is a Midwest regional bank providing commercial, consumer, and wealth management services through branches in Indiana, Ohio, Michigan, and Illinois.

Why Does FRME Give Us Pause?

Flat sales over the last two years suggest it must find different ways to grow during this cycle
Muted 7.1% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
27.3 basis point (100 basis points = 1 percentage point) decline in its net interest margin over the last two years reflects the firm’s willingness to accept lower profitability to defend its market position

At $37.98 per share, First Merchants trades at 0.9x forward P/B. If you’re considering FRME for your portfolio, see our FREE research report to learn more.

Stocks We Like More

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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