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.
Not all profitable companies are created equal, and that’s why we built StockStory - to help you find the ones that truly shine bright. That said, here are two profitable companies that leverage their financial strength to beat the competition and one that may face some trouble.
One Industrials Stock to Sell:
Sherwin-Williams (SHW)
Trailing 12-Month GAAP Operating Margin: 16%
Widely known for its success in the paint industry, Sherwin-Williams (NYSE: SHW) is a manufacturer of paints, coatings, and related products.
Why Does SHW Give Us Pause?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Estimated sales growth of 2.5% for the next 12 months is soft and implies weaker demand
- Free cash flow margin dropped by 7.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up
Sherwin-Williams is trading at $357.08 per share, or 28.4x forward P/E. Dive into our free research report to see why there are better opportunities than SHW.
Two Industrials Stocks to Watch:
Chart (GTLS)
Trailing 12-Month GAAP Operating Margin: 16.2%
Installing the first bulk Co2 tank for McDonalds’s sodas, Chart (NYSE: GTLS) provides equipment to store and transport gasses.
Why Are We Bullish on GTLS?
- Demand is greater than supply as the company’s 31.9% average backlog growth over the past two years shows it’s securing new contracts and accumulating more orders than it can fulfill
- Earnings per share have massively outperformed its peers over the last two years, increasing by 28% annually
- Free cash flow margin increased by 9.6 percentage points over the last five years, giving the company more capital to invest or return to shareholders
At $199.80 per share, Chart trades at 14.7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Granite Construction (GVA)
Trailing 12-Month GAAP Operating Margin: 5.6%
Having played a role in the construction of the Hoover Dam, Granite Construction (NYSE: GVA) is a provider of infrastructure solutions for roads, bridges, and other projects.
Why Do We Like GVA?
- Annual revenue growth of 11.9% over the past two years was outstanding, reflecting market share gains this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 42% over the last two years outstripped its revenue performance
- Returns on capital are increasing as management’s prior bets are starting to bear fruit
Granite Construction’s stock price of $109.37 implies a valuation ratio of 17.8x forward EV-to-EBITDA. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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