Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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. That said, here are three profitable companies that don’t make the cut and some better opportunities instead.
EverQuote (EVER)
Trailing 12-Month GAAP Operating Margin: 7.5%
Aiming to simplify a once complicated process, EverQuote (NASDAQ: EVER) is an online insurance marketplace where consumers can compare and purchase various types of insurance from different providers
Why Are We Cautious About EVER?
- Excessive marketing spend signals little organic demand and traction for its platform
EverQuote’s stock price of $20.79 implies a valuation ratio of 8.3x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than EVER.
Nordson (NDSN)
Trailing 12-Month GAAP Operating Margin: 24.3%
Founded in 1954, Nordson Corporation (NASDAQ: NDSN) manufactures dispensing equipment and industrial adhesives, sealants and coatings.
Why Is NDSN Not Exciting?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Earnings per share lagged its peers over the last two years as they only grew by 1.2% annually
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Nordson is trading at $235.90 per share, or 21.6x forward P/E. Read our free research report to see why you should think twice about including NDSN in your portfolio.
Rockwell Automation (ROK)
Trailing 12-Month GAAP Operating Margin: 15.5%
One of the first companies to address industrial automation, Rockwell Automation (NYSE: ROK) sells products that help customers extract more efficiency from their machinery.
Why Should You Sell ROK?
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $358.99 per share, Rockwell Automation trades at 31.9x forward P/E. To fully understand why you should be careful with ROK, check out our full research report (it’s free for active Edge members).
Stocks We Like More
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