Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.
ZoomInfo (GTM)
Trailing 12-Month GAAP Operating Margin: 16.3%
Operating a platform it calls "RevOS" - short for Revenue Operating System - ZoomInfo (NASDAQ: GTM) provides sales, marketing, and recruiting teams with business intelligence and analytics to identify prospects and deliver targeted outreach.
Why Should You Sell GTM?
- Offerings struggled to generate meaningful interest as its average billings growth of 1% over the last year did not impress
- Demand will likely be weak over the next 12 months as Wall Street expects flat revenue
- Operating margin improved by 5.1 percentage points over the last year as it eliminated redundant costs
At $9.39 per share, ZoomInfo trades at 2.4x forward price-to-sales. Dive into our free research report to see why there are better opportunities than GTM.
Wolverine Worldwide (WWW)
Trailing 12-Month GAAP Operating Margin: 7.6%
Founded in 1883, Wolverine Worldwide (NYSE: WWW) is a global footwear company with a diverse portfolio of brands including Merrell, Hush Puppies, and Saucony.
Why Do We Avoid WWW?
- Sales stagnated over the last five years and signal the need for new growth strategies
- Poor expense management has led to an operating margin of 0.4% that is below the industry average
- Negative returns on capital show management lost money while trying to expand the business, and its falling returns suggest its earlier profit pools are drying up
Wolverine Worldwide’s stock price of $14.92 implies a valuation ratio of 11.4x forward P/E. Check out our free in-depth research report to learn more about why WWW doesn’t pass our bar.
Allegion (ALLE)
Trailing 12-Month GAAP Operating Margin: 21%
Allegion plc (NYSE: ALLE) is a provider of security products and solutions that keep people and assets safe and secure in various environments.
Why Does ALLE Fall Short?
- Annual revenue growth of 4.9% over the last two years was below our standards for the industrials sector
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Eroding returns on capital suggest its historical profit centers are aging
Allegion is trading at $161.07 per share, or 18.6x forward P/E. If you’re considering ALLE for your portfolio, see our FREE research report to learn more.
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