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Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.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.

A business making money today isn’t necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. That said, here are three profitable companies to steer clear of and a few better alternatives.

Oshkosh (OSK)

Trailing 12-Month GAAP Operating Margin: 9.4%

Oshkosh (NYSE:OSK) manufactures specialty vehicles for the defense, fire, emergency, and commercial industry, operating various brand subsidiaries within each industry.

Why Do We Think Twice About OSK?

1. Sales pipeline suggests its future revenue growth may not meet our standards as its average backlog growth of 7.5% for the past two years was weak

2. Projected sales decline of 2.2% for the next 12 months points to a tough demand environment ahead

3. Free cash flow margin dropped by 8.4 percentage points over the last five years, implying the company became more capital intensive as competition picked up

Oshkosh’s stock price of $88.39 implies a valuation ratio of 8.4x forward price-to-earnings. To fully understand why you should be careful with OSK, check out our full research report (it’s free).

UFP Industries (UFPI)

Trailing 12-Month GAAP Operating Margin: 7.4%

Beginning as a lumber supplier in the 1950s, UFP Industries (NASDAQ:UFPI) is a holding company making building materials for the construction, retail, and industrial sectors.

Why Do We Avoid UFPI?

1. Declining unit sales over the past two years imply it may need to invest in improvements to get back on track

2. Earnings per share decreased by more than its revenue over the last two years, showing each sale was less profitable

3. Diminishing returns on capital suggest its earlier profit pools are drying up

At $106.55 per share, UFP Industries trades at 14.8x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than UFPI.

CDW (CDW)

Trailing 12-Month GAAP Operating Margin: 7.9%

Serving as a crucial bridge between technology manufacturers and end users since 1984, CDW (NASDAQ:CDW) is a multi-brand provider of information technology solutions that helps businesses and public sector organizations select, implement, and manage hardware, software, and IT services.

Why Is CDW Risky?

1. Annual sales declines of 6% for the past two years show its products and services struggled to connect with the market during this cycle

2. Estimated sales growth of 1.7% for the next 12 months is soft and implies weaker demand

3. Earnings per share have dipped by 1.4% annually over the past two years, which is concerning because stock prices follow EPS over the long term