Unprofitable companies can burn through cash quickly, leaving investors exposed if they fail to turn things around. Without a clear path to profitability, these businesses risk running out of capital or relying on dilutive fundraising.
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.
Molson Coors (TAP)
Trailing 12-Month GAAP Operating Margin: -20.2%
Sporting an impressive roster of iconic beer brands, Molson Coors (NYSE:TAP) is a global brewing giant with a rich history dating back more than two centuries.
Why Do We Think TAP Will Underperform?
- Shrinking unit sales over the past two years show it’s struggled to move its products and had to rely on price increases
- Costs have risen faster than its revenue over the last year, causing its operating margin to decline by 34.6 percentage points
- Underwhelming 0.6% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its shrinking returns suggest its past profit sources are losing steam
Molson Coors’s stock price of $39.94 implies a valuation ratio of 8.8x forward P/E. To fully understand why you should be careful with TAP, check out our full research report (it’s free).
Bark (BARK)
Trailing 12-Month GAAP Operating Margin: -10.2%
Making a name for itself with the BarkBox, Bark (NYSE:BARK) specializes in subscription-based, personalized pet products.
Why Are We Out on BARK?
- Flat sales over the last five years suggest it must innovate and find new ways to grow
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
At $8.77 per share, Bark trades at 12.9x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including BARK in your portfolio.
HA Sustainable Infrastructure Capital (HASI)
Trailing 12-Month GAAP Operating Margin: -9.1%
With a proprietary "CarbonCount" metric that quantifies the environmental impact of each dollar invested, HA Sustainable Infrastructure Capital (NYSE:HASI) is an investment firm that finances and develops climate-positive infrastructure projects across renewable energy, energy efficiency, and ecological restoration.
Why Are We Wary of HASI?
- Performance over the past two years shows its incremental sales were less profitable, as its 9.7% annual earnings per share growth trailed its revenue gains
- ROE of 5.8% reflects management’s challenges in identifying attractive investment opportunities
- 29× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
HA Sustainable Infrastructure Capital is trading at $38.20 per share, or 12.6x forward P/E. To fully understand why you should be careful with HASI, check out our full research report (it’s free).
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