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 companiesthat don’t make the cut and some better opportunities instead.
Plug Power (PLUG)
Trailing 12-Month GAAP Operating Margin: -173%
Powering forklifts for Walmart’s distribution centers, Plug Power (NASDAQ:PLUG) provides hydrogen fuel cells used to power electric motors.
Why Are We Hesitant About PLUG?
- Muted 4.3% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
- Cash-burning history makes us doubt the long-term viability of its business model
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
At $1.43 per share, Plug Power trades at 2.4x forward price-to-sales. To fully understand why you should be careful with PLUG, check out our full research report (it’s free).
Northern Oil and Gas (NOG)
Trailing 12-Month GAAP Operating Margin: -21.2%
Taking the path less traveled in the oil industry by choosing not to operate its own wells, Northern Oil and Gas (NYSE:NOG) acquires minority stakes in oil and gas wells operated by other companies across major U.S. shale basins.
Why Are We Cautious About NOG?
- Efficiency has decreased over the last five years as its EBITDA margin fell by 22.9 percentage points
- 8× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
Northern Oil and Gas is trading at $26.05 per share, or 5.5x forward P/E. Read our free research report to see why you should think twice about including NOG in your portfolio.
Patterson-UTI (PTEN)
Trailing 12-Month GAAP Operating Margin: -1.1%
Operating 135 Tier-1 super-spec rigs that can handle the industry's most demanding drilling projects, Patterson-UTI (NASDAQ:PTEN) provides contract drilling rigs, hydraulic fracturing, and drill bits to oil and gas operators.
Why Do We Think Twice About PTEN?
- Gross margin of 29.9% reflects its high production costs and unfavorable asset base
- EBITDA margin didn’t move over the last five years, showing it couldn’t increase its efficiency
- Lacking free cash flow generation means it has few chances to reinvest for growth, repurchase shares, or distribute capital
Patterson-UTI’s stock price of $11.55 implies a valuation ratio of 64.6x forward P/E. If you’re considering PTEN for your portfolio, see our FREE research report to learn more.
Stocks We Like More
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.