Even if a company is profitable, it doesn’t always mean it’s a great investment. Some struggle to maintain growth, face looming threats, or fail to reinvest wisely, limiting their future potential.
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.
AGCO (AGCO)
Trailing 12-Month GAAP Operating Margin: 5.9%
With a history that features both organic growth and acquisitions, AGCO (NYSE: AGCO) designs, manufactures, and sells agricultural machinery and related technology.
Why Should You Sell AGCO?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 16.4% annually over the last two years
- Earnings per share have dipped by 21% annually over the past two years, which is concerning because stock prices follow EPS over the long term
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
AGCO is trading at $140.47 per share, or 23.9x forward P/E. Check out our free in-depth research report to learn more about why AGCO doesn’t pass our bar.
Byrna (BYRN)
Trailing 12-Month GAAP Operating Margin: 10%
Providing civilians with tools to disable, disarm, and deter would-be assailants, Byrna (NASDAQ: BYRN) is a provider of non-lethal weapons.
Why Do We Think Twice About BYRN?
- Poor expense management has led to an operating margin of -0.1% that is below the industry average
- Cash-burning history makes us doubt the long-term viability of its business model
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
At $12.49 per share, Byrna trades at 27.4x forward P/E. To fully understand why you should be careful with BYRN, check out our full research report (it’s free).
MSCI (MSCI)
Trailing 12-Month GAAP Operating Margin: 54.7%
Originally known as Morgan Stanley Capital International before becoming independent in 2007, MSCI (NYSE: MSCI) provides critical decision support tools, indexes, and analytics that help global investors understand risk and return factors and build more effective investment portfolios.
Why Are We Cautious About MSCI?
- Push for growth has led to negative returns on capital, signaling value destruction
MSCI’s stock price of $525.89 implies a valuation ratio of 26.9x forward P/E. If you’re considering MSCI for your portfolio, see our FREE research report to learn more.
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