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. That said, here are three unprofitable companiesthat don’t make the cut and some better opportunities instead.
Udemy (UDMY)
Trailing 12-Month GAAP Operating Margin: -1.5%
With courses ranging from investing to cooking to computer programming, Udemy (NASDAQ:UDMY) is an online learning platform that connects learners with expert instructors who specialize in a wide range of topics.
Why Are We Hesitant About UDMY?
- Decision to emphasize platform growth over monetization has contributed to 1.7% annual declines in its average revenue per buyer
- Projected sales are flat for the next 12 months, implying demand will slow from its three-year trend
- Expensive marketing campaigns hurt its profitability and make us wonder what would happen if it let up on the gas
Udemy is trading at $5.27 per share, or 9.3x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than UDMY.
Boeing (BA)
Trailing 12-Month GAAP Operating Margin: -10.2%
One of the companies that forms a duopoly in the commercial aircraft market, Boeing (NYSE:BA) develops, manufactures, and services commercial airplanes, defense products, and space systems.
Why Are We Out on BA?
- Underwhelming unit sales over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Cash-burning history makes us doubt the long-term viability of its business model
- Negative EBITDA restricts its access to capital and increases the probability of shareholder dilution if things turn unexpectedly
Boeing’s stock price of $204.25 implies a valuation ratio of 307x forward P/E. Read our free research report to see why you should think twice about including BA in your portfolio.
American Outdoor Brands (AOUT)
Trailing 12-Month GAAP Operating Margin: -2.6%
Spun off from Smith and Wesson in 2020, American Outdoor Brands (NASDAQ:AOUT) is an outdoor and recreational products company that offers outdoor and shooting sports products but does not sell firearms themselves.
Why Do We Think AOUT Will Underperform?
- Sales were flat over the last five years, indicating it’s failed to expand its business
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 1.5% for the last two years
- Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value
At $7.87 per share, American Outdoor Brands trades at 58.8x forward P/E. Dive into our free research report to see why there are better opportunities than AOUT.
Stocks We Like More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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