3 Profitable Stocks That Concern Us

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.

A business making money today isn’t necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. Keeping that in mind, here are three profitable companies to avoid and some better opportunities instead.

E.W. Scripps (SSP)

Trailing 12-Month GAAP Operating Margin: 17.1%

Founded as a chain of daily newspapers, E.W. Scripps (NASDAQ:SSP) is a diversified media enterprise operating a range of local television stations, national networks, and digital media platforms.

Why Are We Out on SSP?

1. Sales stagnated over the last two years and signal the need for new growth strategies
2. Underwhelming 3.5% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its shrinking returns suggest its past profit sources are losing steam
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

At $2.97 per share, E.W. Scripps trades at 0.8x forward EV-to-EBITDA. Check out our free in-depth research report to learn more about why SSP doesn’t pass our bar.

Somnigroup (SGI)

Trailing 12-Month GAAP Operating Margin: 8.7%

Established through the merger of Tempur-Pedic and Sealy in 2012, Somnigroup (NYSE:SGI) is a bedding manufacturer known for its innovative memory foam mattresses and sleep products

Why Are We Hesitant About SGI?

1. 10.1% annual revenue growth over the last two years was slower than its consumer discretionary peers
2. Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 9.6% for the last two years
3. Diminishing returns on capital suggest its earlier profit pools are drying up

Somnigroup is trading at $80.08 per share, or 28.9x forward P/E. Dive into our free research report to see why there are better opportunities than SGI.

Taylor Morrison Home (TMHC)

Trailing 12-Month GAAP Operating Margin: 15.1%

Named “America’s Most Trusted Home Builder” in 2019, Taylor Morrison Home (NYSE:TMHC) builds single family homes and communities across the United States.

Why Should You Dump TMHC?

1. Product roadmap and go-to-market strategy need to be reconsidered as its backlog has averaged 12.7% declines over the past two years
2. Sales are projected to tank by 8.2% over the next 12 months as demand evaporates further
3. Falling earnings per share over the last two years has some investors worried as stock prices ultimately follow EPS over the long term

Taylor Morrison Home’s stock price of $67.98 implies a valuation ratio of 8.9x forward P/E. If you’re considering TMHC for your portfolio, see our FREE research report to learn more.

Stocks We Like More

When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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