Running at a loss can be a red flag. Many of these businesses face mounting challenges as competition increases and funding becomes harder to secure.
Finding the right unprofitable companies is difficult, which is why we started StockStory — to help you navigate the market. That said, here are three unprofitable companiesto steer clear of and a few better alternatives.
Intel (INTC)
Trailing 12-Month GAAP Operating Margin: -9.4%
Inventor of the x86 processor that powered decades of technological innovation in PCs, data centers, and numerous other markets, Intel (NASDAQ: INTC) is a leading manufacturer of computer processors and graphics chips.
Why Do We Steer Clear of INTC?
- Sales tumbled by 5.9% annually over the last five years, showing market trends are working against it during this cycle
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
- Free cash flow margin dropped by 19.7 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Intel is trading at $127.61 per share, or 125.6x forward P/E. Check out our free in-depth research report to learn more about why INTC doesn’t pass our bar.
Kura Sushi (KRUS)
Trailing 12-Month GAAP Operating Margin: -1.5%
Known for its conveyor belt that transports dishes to diners, Kura Sushi (NASDAQ: KRUS) is a chain of sushi restaurants serving traditional Japanese fare with a touch of modernity and technology.
Why Are We Wary of KRUS?
- Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
- Cash-burning history makes us doubt the long-term viability of its business model
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Kura Sushi’s stock price of $57.86 implies a valuation ratio of 29.8x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than KRUS.
Teleflex (TFX)
Trailing 12-Month GAAP Operating Margin: -10.3%
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 Are We Out on TFX?
- Products and services are facing significant end-market challenges during this cycle as sales have declined by 15.8% annually over the last two years
- Constant currency revenue growth has disappointed over the past two years and shows demand was soft
- 19.8 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
At $129.87 per share, Teleflex trades at 16.8x forward P/E. If you’re considering TFX for your portfolio, see our FREE research report to learn more.
Stocks We Like More
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