A company that generates cash isn’t automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Luckily for you, we built StockStory to help you separate the good from the bad. Keeping that in mind, here are two cash-producing companies that leverage their financial strength to beat the competition and one best left off your watchlist.
One Stock to Sell:
Diebold Nixdorf (DBD)
Trailing 12-Month Free Cash Flow Margin: 6.6%
With roots dating back to 1859 and a presence in over 100 countries, Diebold Nixdorf (NYSE: DBD) provides automated self-service technology, software, and services that help banks and retailers digitize their customer transactions.
Why Should You Dump DBD?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last five years
- Earnings per share have contracted by 10.9% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance
- Poor free cash flow margin of -1% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
Diebold Nixdorf is trading at $69.14 per share, or 11.7x forward P/E. Read our free research report to see why you should think twice about including DBD in your portfolio.
Two Stocks to Watch:
SPX Technologies (SPXC)
Trailing 12-Month Free Cash Flow Margin: 11.5%
With roots dating back to 1912 as the Piston Ring Company, SPX Technologies (NYSE: SPXC) supplies specialized infrastructure equipment for HVAC systems and detection and measurement applications across industrial, commercial, and utility markets.
Why Do We Love SPXC?
- Annual revenue growth of 15.1% over the last five years was superb and indicates its market share increased during this cycle
- Additional sales over the last two years increased its profitability as the 23.6% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin grew by 8.1 percentage points over the last five years, giving the company more chips to play with
At $194.50 per share, SPX Technologies trades at 3.8x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free.
Matrix Service (MTRX)
Trailing 12-Month Free Cash Flow Margin: 5.9%
Founded in Oklahoma, Matrix Service (NASDAQ: MTRX) provides engineering, fabrication, construction, and maintenance services primarily to the energy and industrial markets.
Why Do We Like MTRX?
- Projected revenue growth of 12% for the next 12 months indicates demand will rise above its two-year trend
- Additional sales over the last two years increased its profitability as the 58.2% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin increased by 8 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Matrix Service’s stock price of $12.23 implies a valuation ratio of 17.2x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
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