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.
Finding the right unprofitable companies is difficult, which is why we started StockStory - to help you navigate the market. Keeping that in mind, here are three unprofitable companiesthat don’t make the cut and some better opportunities instead.
Bumble (BMBL)
Trailing 12-Month GAAP Operating Margin: -19.2%
Started by the co-founder of Tinder, Whitney Wolfe Herd, Bumble (NASDAQ:BMBL) is a leading dating app built with women at the center.
Why Do We Think Twice About BMBL?
- Modest 4.8% annual growth in paying users over the last two years indicates potential challenges in customer acquisition and retention
- Demand has fallen off a cliff over the last two years as its average revenue per buyer fell by 3.9% annually while it struggled to expand its customer base
- Projected sales decline of 13.7% for the next 12 months points to a tough demand environment ahead
At $3.64 per share, Bumble trades at 3.4x forward EV/EBITDA. Read our free research report to see why you should think twice about including BMBL in your portfolio.
Teleflex (TFX)
Trailing 12-Month GAAP Operating Margin: -7.5%
With a portfolio spanning from vascular access catheters to minimally invasive surgical tools, Teleflex (NYSE:TFX) designs, manufactures, and supplies single-use medical devices used in critical care and surgical procedures across hospitals worldwide.
Why Does TFX Fall Short?
- Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
- Free cash flow margin shrank by 12.1 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Teleflex’s stock price of $122.47 implies a valuation ratio of 8.3x forward P/E. Check out our free in-depth research report to learn more about why TFX doesn’t pass our bar.
AMN Healthcare Services (AMN)
Trailing 12-Month GAAP Operating Margin: -9.8%
With a network of thousands of healthcare professionals ranging from nurses to physicians to executives, AMN Healthcare (NYSE:AMN) provides healthcare workforce solutions including temporary staffing, permanent placement, and technology platforms for hospitals and healthcare facilities across the United States.
Why Do We Steer Clear of AMN?
- Declining travelers on assignment over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Falling earnings per share over the last five years has some investors worried as stock prices ultimately follow EPS over the long term
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
AMN Healthcare Services is trading at $15.55 per share, or 21.3x forward P/E. To fully understand why you should be careful with AMN, check out our full research report (it’s free for active Edge members).
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