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. That said, here are three unprofitable companiesthat don’t make the cut and some better opportunities instead.

Asana (ASAN)

Trailing 12-Month GAAP Operating Margin: -25%

Born from the founders' frustration with the inefficiencies of email-based collaboration at Facebook, Asana (NYSE: ASAN) provides a work management platform that helps organizations track projects, set goals, and manage workflows in a centralized digital workspace.

Why Should You Dump ASAN?

1. Average billings growth of 9.4% over the last year was subpar, suggesting it struggled to push its software and might have to lower prices to stimulate demand
2. Platform has low switching costs as its net revenue retention rate of 95.7% demonstrates high turnover
3. Drawn-out sales process reflects its software’s integration hurdles with enterprise clients, restraining customer growth potential

At $6.15 per share, Asana trades at 1.7x forward price-to-sales. Dive into our free research report to see why there are better opportunities than ASAN.

Teleflex (TFX)

Trailing 12-Month GAAP Operating Margin: -5.8%

With a portfolio spanning from vascular access catheters to minimally invasive surgical tools, Teleflex (NYSE: TFX) designs, manufactures, and supplies single-use medical devices used in critical care and surgical procedures across hospitals worldwide.

Why Do We Steer Clear of TFX?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 18.3% annually over the last two years
2. Constant currency revenue growth has disappointed over the past two years and shows demand was soft
3. Free cash flow margin dropped by 20.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up

Teleflex is trading at $114.22 per share, or 16.2x forward P/E. If you’re considering TFX for your portfolio, see our FREE research report to learn more.

Dentsply Sirona (XRAY)

Trailing 12-Month GAAP Operating Margin: -11.5%

With roots dating back to 1877 when it introduced the first dental electric drill, Dentsply Sirona (NASDAQ: XRAY) manufactures and sells professional dental equipment, technologies, and consumable products used by dentists and specialists worldwide.

Why Should You Sell XRAY?

1. Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
2. Push for growth has led to negative returns on capital, signaling value destruction, and its falling returns suggest its earlier profit pools are drying up
3. Eroding returns on capital from an already low base indicate that management’s recent investments are destroying value

Dentsply Sirona’s stock price of $11.47 implies a valuation ratio of 8.2x forward P/E. Read our free research report to see why you should think twice about including XRAY in your portfolio.

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