Even if a business is profitable, that doesn’t always mean it’s a great investment. Some struggle to sustain growth, face looming threats, or fail to reinvest wisely, limiting their future potential.
Not all profitable businesses are equal, and that’s why we created StockStory – to help you find the ones that really shine. With that in mind, here’s one profitable company that’s leveraging its financial strength to beat the competition and two that are best left alone.
GAAP operating margin over the following 12 months: 6.1%
Known as the “Content Cloud” for managing the 90% of enterprise data that exists as unstructured files and documents, Box (NYSE: BOX) provides a cloud-based platform that allows organizations to securely manage, share and collaborate on their content from anywhere and on any device.
Why does BOX fail?
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Customers have been hesitant to engage with its platform over the past year as its average billing growth of 10% has not been exceeded.
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Projected sales growth of 7.9% for the next 12 months suggests sluggish demand
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The operating margin did not change over the last year, showing that it could not increase its efficiency
Box is trading at $31.08 per share, or 3.9 times the forward sale price. If you’re considering BOX for your portfolio, check out our FREE research report to learn more.
GAAP operating margin over the following 12 months: 19%
Born from a real estate investment trust transformed into a manufacturing powerhouse, Danaher (NYSE: DHR) is a global science and technology company that provides specialized equipment, software and services for biotechnology, life sciences and diagnostics.
Why are we hesitant about DHR?
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Organic sales performance over the past two years indicates that the company may need to make strategic adjustments or rely on mergers and acquisitions to catalyze faster growth.
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Efficiency has declined over the past five years, with adjusted operating margin falling 7.9 percentage points.
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Free cash flow margin fell 8 percentage points over the past five years, meaning the company became more capital intensive as competition intensified.
At $211.03 per share, Danaher trades at 26.2x forward P/E. Dive into our free research report to find out why there are better opportunities than DHR.
GAAP operating margin over the following 12 months: 11.5%
With a network spanning 39 states and three countries, Universal Health Services (NYSE: UHS) operates acute care hospitals and behavioral health facilities in the United States, United Kingdom and Puerto Rico.
