Unprofitable companies face headwinds as they struggle to keep operating expenses under control. Some may be investing heavily, but the majority fail to convert spending into sustainable growth.

A lack of profits can lead to trouble, but StockStory helps you identify the businesses that stand a chance of making it through. Keeping that in mind, here are three unprofitable companiesthat don’t make the cut and some better opportunities instead.

PlayStudios (MYPS)

Trailing 12-Month GAAP Operating Margin: -12.4%

Founded by a team of former gaming industry executives, PlayStudios (NASDAQ: MYPS) offers free-to-play digital casino games.

Why Are We Wary of MYPS?

1. Sales tumbled by 4.4% annually over the last two years, showing consumer trends are working against its favor
2. Poor expense management has led to operating margin losses
3. Negative returns on capital show management lost money while trying to expand the business

PlayStudios’s stock price of $1.39 implies a valuation ratio of 3.5x forward EV-to-EBITDA. To fully understand why you should be careful with MYPS, check out our full research report (it’s free).

AMC Entertainment (AMC)

Trailing 12-Month GAAP Operating Margin: -2.6%

With a profile that was raised due to meme stock mania beginning in 2021, AMC Entertainment (NYSE: AMC) operates movie theaters primarily in the US and Europe.

Why Do We Think Twice About AMC?

1. Annual revenue declines of 2.7% over the last five years indicate problems with its market positioning
2. Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
3. Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution

At $3.12 per share, AMC Entertainment trades at 2.3x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including AMC in your portfolio.

Viatris (VTRS)

Trailing 12-Month GAAP Operating Margin: -21.5%

Created through the 2020 merger of Mylan and Pfizer's Upjohn division, Viatris (NASDAQ: VTRS) is a healthcare company that develops, manufactures, and distributes branded and generic medicines across more than 165 countries worldwide.

Why Is VTRS Risky?

1. Customers postponed purchases of its products and services this cycle as its revenue declined by 4.8% annually over the last two years
2. Issuance of new shares over the last five years caused its earnings per share to fall by 11.1% annually while its revenue grew
3. Push for growth has led to negative returns on capital, signaling value destruction, and its decreasing returns suggest its historical profit centers are aging

Viatris is trading at $9.10 per share, or 3.9x forward P/E. If you’re considering VTRS for your portfolio, see our FREE research report to learn more.

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