3 Unprofitable Stocks in the Doghouse

Unprofitable companies face headwinds as they struggle to keep operating expenses under control. Some may be investing heavily, but the majority fail to convert spending into sustainable growth.

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 companiesto avoid and some better opportunities instead.

Asure (ASUR)

Trailing 12-Month GAAP Operating Margin: -10%

Created from the merger of two small workforce management companies in 2007, Asure (NASDAQ:ASUR) provides cloud based payroll and HR software for small and medium-sized businesses (SMBs).

Why Are We Cautious About ASUR?

1. Revenue increased by 15.1% annually over the last three years, acceptable on an absolute basis but tepid for a software company enjoying secular tailwinds
2. Offerings struggled to generate meaningful interest as its average billings growth of 7.9% over the last year did not impress
3. Expenses have increased as a percentage of revenue over the last year as its operating margin fell by 5.4 percentage points

At $9.55 per share, Asure trades at 1.9x forward price-to-sales. To fully understand why you should be careful with ASUR, check out our full research report (it’s free).

BeautyHealth (SKIN)

Trailing 12-Month GAAP Operating Margin: -19.5%

Operating in the emerging beauty health category, the appropriately named BeautyHealth (NASDAQ:SKIN) is a skincare company best known for its Hydrafacial product that cleanses and hydrates skin.

Why Do We Pass on SKIN?

1. Annual revenue growth of 3.8% over the last three years was below our standards for the consumer staples sector
2. Suboptimal cost structure is highlighted by its history of operating margin losses
3. 10× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings

BeautyHealth is trading at $1.54 per share, or 12x forward EV-to-EBITDA. Dive into our free research report to see why there are better opportunities than SKIN.

Sphere Entertainment (SPHR)

Trailing 12-Month GAAP Operating Margin: -37.5%

Famous for its viral Las Vegas Sphere venue, Sphere Entertainment (NYSE:SPHR) hosts live entertainment events and distributes content across various media platforms.

Why Do We Avoid SPHR?

1. Sales trends were unexciting over the last five years as its 2.4% annual growth was below the typical consumer discretionary company
2. Negative free cash flow raises questions about the return timeline for its investments
3. Short cash runway increases the probability of a capital raise that dilutes existing shareholders

Sphere Entertainment’s stock price of $38.19 implies a valuation ratio of 7.6x forward EV-to-EBITDA. If you’re considering SPHR for your portfolio, see our FREE research report to learn more.

High-Quality Stocks for All Market Conditions

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

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