While profitability is essential, it doesn’t guarantee long-term success. Some companies that rest on their margins will lose ground as competition intensifies - as Jeff Bezos said, "Your margin is my opportunity".
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 that don’t make the cut and some better opportunities instead.
Service International (SCI)
Trailing 12-Month GAAP Operating Margin: 22.4%
Founded in 1962, Service International (NYSE: SCI) is a leading provider of death care products and services in North America.
Why Does SCI Worry Us?
- Sluggish trends in its funeral services performed suggest customers aren’t adopting its solutions as quickly as the company hoped
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 3%
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
At $81.04 per share, Service International trades at 20.1x forward P/E. If you’re considering SCI for your portfolio, see our FREE research report to learn more.
Progyny (PGNY)
Trailing 12-Month GAAP Operating Margin: 6.2%
Pioneering a data-driven approach to family building that has achieved an industry-leading patient satisfaction score of +80, Progyny (NASDAQ: PGNY) provides comprehensive fertility and family building benefits solutions to employers, helping employees access quality fertility treatments and support services.
Why Does PGNY Fall Short?
- Revenue base of $1.24 billion puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Estimated sales growth of 4.8% for the next 12 months implies demand will slow from its two-year trend
- ROIC of 0.6% reflects management’s challenges in identifying attractive investment opportunities
Progyny’s stock price of $22.51 implies a valuation ratio of 13.7x forward P/E. Dive into our free research report to see why there are better opportunities than PGNY.
Markel Group (MKL)
Trailing 12-Month GAAP Operating Margin: 20.4%
Often referred to as a "mini Berkshire Hathaway" for its three-engine business model of insurance, investments, and wholly-owned businesses, Markel Group (NYSE: MKL) is a specialty insurance company that underwrites complex risks, manages investment portfolios, and owns a diverse collection of operating businesses.
Why Do We Think Twice About MKL?
- Net premiums earned only expanded by 2.9% annually over the last two years, trailing its insurance peers as its scale limited incremental business
- Sales are projected to tank by 6.4% over the next 12 months as demand evaporates
- Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 8% annually
Markel Group is trading at $1,929 per share, or 1.4x forward P/B. Read our free research report to see why you should think twice about including MKL in your portfolio.
Stocks We Like More
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
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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-micro-cap company Tecnoglass (+1,754% 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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