Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages. Just because a business is in the green today doesn’t mean it will thrive tomorrow.

Not all profitable companies are created equal, and that’s why we built StockStory - to help you find the ones that truly shine bright. Keeping that in mind, here is one profitable company that balances growth and profitability and two that may face some trouble.

Two Stocks to Sell:

Bloomin' Brands (BLMN)

Trailing 12-Month GAAP Operating Margin: 3%

Owner of the iconic Australian-themed Outback Steakhouse, Bloomin’ Brands (NASDAQ: BLMN) is a leading American restaurant company that owns and operates a portfolio of popular restaurant brands.

Why Are We Out on BLMN?

1. Disappointing same-store sales over the past two years show customers aren’t responding well to its menu offerings and dining experience
2. Projected sales decline of 2.4% for the next 12 months points to an even tougher demand environment ahead
3. High net-debt-to-EBITDA ratio of 6× increases the risk of forced asset sales or dilutive financing if operational performance weakens

Bloomin' Brands’s stock price of $7.57 implies a valuation ratio of 7.1x forward P/E. Check out our free in-depth research report to learn more about why BLMN doesn’t pass our bar.

Pool (POOL)

Trailing 12-Month GAAP Operating Margin: 11.1%

Founded in 1993 and headquartered in Louisiana, Pool (NASDAQ: POOL) is one of the largest wholesale distributors of swimming pool supplies, equipment, and related leisure products.

Why Should You Sell POOL?

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. Projected sales growth of 2.5% for the next 12 months suggests sluggish demand
3. Eroding returns on capital suggest its historical profit centers are aging

At $300 per share, Pool trades at 26.7x forward P/E. Read our free research report to see why you should think twice about including POOL in your portfolio.

One Stock to Watch:

Parsons (PSN)

Trailing 12-Month GAAP Operating Margin: 6.3%

Delivering aerospace technology during the Cold War-era, Parsons (NYSE: PSN) offers engineering, construction, and cybersecurity solutions for the infrastructure and defense sectors.

Why Does PSN Stand Out?

1. Annual revenue growth of 18.4% over the last two years was superb and indicates its market share increased during this cycle
2. Share repurchases over the last two years enabled its annual earnings per share growth of 26.7% to outpace its revenue gains
3. Improving returns on capital suggest its past investments are beginning to deliver value

Parsons is trading at $88.22 per share, or 26.7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.

Stocks We Like Even More

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