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.
Finding the right unprofitable companies is difficult, which is why we started StockStory - to help you navigate the market. Keeping that in mind, here is one unprofitable company that could turn today’s losses into long-term gains and two that could struggle to survive.
Two Stocks to Sell:
Impinj (PI)
Trailing 12-Month GAAP Operating Margin: -1.8%
Founded by Caltech professor Carver Mead and one of his students Chris Diorio, Impinj (NASDAQ: PI) is a maker of radio-frequency identification (RFID) hardware and software.
Why Do We Think Twice About PI?
- Projected sales growth of 9.3% for the next 12 months suggests sluggish demand
- Suboptimal cost structure is highlighted by its history of operating margin losses
- Push for growth has led to negative returns on capital, signaling value destruction
Impinj’s stock price of $137.37 implies a valuation ratio of 64.7x forward P/E. If you’re considering PI for your portfolio, see our FREE research report to learn more.
Myriad Genetics (MYGN)
Trailing 12-Month GAAP Operating Margin: -46.9%
Founded in 1991 as one of the pioneers in translating genetic discoveries into clinical applications, Myriad Genetics (NASDAQ: MYGN) develops genetic tests that assess disease risk, guide treatment decisions, and provide insights across oncology, women's health, and mental health.
Why Is MYGN Risky?
- Annual revenue growth of 3.5% over the last two years was below our standards for the healthcare sector
- Negative returns on capital show management lost money while trying to expand the business, and its shrinking returns suggest its past profit sources are losing steam
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Myriad Genetics is trading at $3.91 per share, or 30.3x forward P/E. Read our free research report to see why you should think twice about including MYGN in your portfolio.
One Stock to Watch:
Gevo (GEVO)
Trailing 12-Month GAAP Operating Margin: -2.9%
Operating one of the largest dairy-based renewable natural gas facilities in the United States, Gevo (NASDAQ: GEVO) produces sustainable aviation fuel and other renewable hydrocarbon fuels from plant-based feedstocks like corn.
Why Could GEVO Be a Winner?
- Annual revenue growth of 19% over the past ten years was outstanding, reflecting market share gains this cycle
- EBITDA profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
At $1.68 per share, Gevo trades at 2.2x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
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