3 Value Stocks We Steer Clear Of

August 12, 2025 at 10:03 AM EDT

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.

This distinction between true value and value traps can challenge even the most skilled investors. Luckily for you, we started StockStory to help you uncover exceptional companies. That said, here are three value stocks climbing an uphill battle and some other investments you should look into instead.

Sprout Social (SPT)

Forward P/S Ratio: 1.6x

Founded by Justyn Howard and Aaron Rankin in 2010, Sprout Social (NASDAQ: SPT) provides a software as a service platform that companies can use to schedule and respond to posts on major social media networks like Twitter, Facebook, Instagram, Youtube and LinkedIn.

Why Does SPT Fall Short?

Historical operating margin losses show it had an inefficient cost structure while scaling
Low free cash flow margin of 7.6% for the last year gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders

At $13.48 per share, Sprout Social trades at 1.6x forward price-to-sales. To fully understand why you should be careful with SPT, check out our full research report (it’s free).

Steelcase (SCS)

Forward P/E Ratio: 14.5x

Founded in 1912 when metal office furniture was replacing wooden alternatives, Steelcase (NYSE: SCS) is a global office furniture manufacturer that designs and produces workplace solutions including desks, chairs, architectural products, and services.

Why Do We Pass on SCS?

Sales were flat over the last five years, indicating it’s failed to expand this cycle
Flat earnings per share over the last five years lagged its peers
Low returns on capital reflect management’s struggle to allocate funds effectively

Steelcase is trading at $16.12 per share, or 14.5x forward P/E. Check out our free in-depth research report to learn more about why SCS doesn’t pass our bar.

Kforce (KFRC)

Forward P/E Ratio: 12.7x

With nearly 60 years of matching skilled professionals with the right opportunities, Kforce (NYSE: KFRC) is a professional staffing company that specializes in placing technology and finance experts with businesses on both temporary and permanent bases.

Why Is KFRC Risky?

Annual sales declines of 9.2% for the past two years show its products and services struggled to connect with the market during this cycle
Sales were less profitable over the last two years as its earnings per share fell by 13.8% annually, worse than its revenue declines
Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability

Kforce’s stock price of $31.05 implies a valuation ratio of 12.7x forward P/E. Dive into our free research report to see why there are better opportunities than KFRC.

High-Quality Stocks for All Market Conditions

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3 Value Stocks We Steer Clear Of

Sprout Social (SPT)

Steelcase (SCS)

Kforce (KFRC)

High-Quality Stocks for All Market Conditions

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