3 Unprofitable Stocks with Warning Signs

Running at a loss can be a red flag. Many of these businesses face mounting challenges as competition increases and funding becomes harder to secure.

A lack of profits can lead to trouble, but StockStory helps you identify the businesses that stand a chance of making it through. Keeping that in mind, here are three unprofitable companiesthat don’t make the cut and some better opportunities instead.

PagerDuty (PD)

Trailing 12-Month GAAP Operating Margin: -5.9%

Born from the frustration of developers being woken up by unprioritized alerts, PagerDuty (NYSE:PD) is a digital operations management platform that helps organizations detect and respond to IT incidents, outages, and other critical issues in real-time.

Why Is PD Not Exciting?

1. Offerings struggled to generate meaningful interest as its average billings growth of 5.9% over the last year did not impress
2. Estimated sales growth of 5.8% for the next 12 months implies demand will slow from its two-year trend
3. Historical operating margin losses point to an inefficient cost structure

PagerDuty’s stock price of $14.76 implies a valuation ratio of 2.7x forward price-to-sales. Check out our free in-depth research report to learn more about why PD doesn’t pass our bar.

Middleby (MIDD)

Trailing 12-Month GAAP Operating Margin: -2.3%

Holding a Guinness World Record for creating the world’s fastest conveyor pizza oven, Middleby (NYSE:MIDD) is a food service and equipment manufacturer.

Why Is MIDD Risky?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Costs have risen faster than its revenue over the last five years, causing its operating margin to decline by 21.1 percentage points
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

At $112.61 per share, Middleby trades at 12.8x forward P/E. Dive into our free research report to see why there are better opportunities than MIDD.

Sunrun (RUN)

Trailing 12-Month GAAP Operating Margin: -150%

Helping homeowners use solar energy to power their homes, Sunrun (NASDAQ:RUN) provides residential solar electricity, specializing in panel installation and leasing services.

Why Are We Hesitant About RUN?

1. Flat sales over the last two years suggest it must find different ways to grow during this cycle
2. Cash-burning history makes us doubt the long-term viability of its business model
3. Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders

Sunrun is trading at $17.90 per share, or 29.2x forward P/E. To fully understand why you should be careful with RUN, check out our full research report (it’s free for active Edge members).

Stocks We Like More

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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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