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A company with profits isn’t always a great investment. Some struggle to maintain growth, face looming threats, or fail to reinvest wisely, limiting their future potential.

Profits are valuable, but they’re not everything. At StockStory, we help you identify the companies that have real staying power. That said, here are three profitable companies to steer clear of and a few better alternatives.

Floor And Decor (FND)

Trailing 12-Month GAAP Operating Margin: 5.8%

Operating large, warehouse-style stores, Floor & Decor (NYSE:FND) is a specialty retailer that specializes in hard flooring surfaces for the home such as tiles, hardwood, stone, and laminates.

Why Are We Hesitant About FND?

1. Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience

2. Modest revenue base of $4.52 billion gives it less fixed cost leverage and fewer distribution channels than larger companies

3. ROIC of 9.1% reflects management’s challenges in identifying attractive investment opportunities, and its decreasing returns suggest its historical profit centers are aging

Floor And Decor is trading at $78.40 per share, or 37.4x forward P/E. Check out our free in-depth research report to learn more about why FND doesn’t pass our bar.

Wolverine Worldwide (WWW)

Trailing 12-Month GAAP Operating Margin: 7%

Founded in 1883, Wolverine Worldwide (NYSE:WWW) is a global footwear company with a diverse portfolio of brands including Merrell, Hush Puppies, and Saucony.

Why Do We Avoid WWW?

1. Annual revenue declines of 4.1% over the last five years indicate problems with its market positioning

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

3. Push for growth has led to negative returns on capital, signaling value destruction

Wolverine Worldwide’s stock price of $16.43 implies a valuation ratio of 14.8x forward P/E. To fully understand why you should be careful with WWW, check out our full research report (it’s free).

Polaris (PII)

Trailing 12-Month GAAP Operating Margin: 3.2%

Founded in 1954, Polaris (NYSE:PII) designs and manufactures high-performance off-road vehicles, snowmobiles, and motorcycles.

Why Do We Pass on PII?

1. Products and services have few die-hard fans as sales have declined by 11.6% annually over the last two years

2. Sales over the last five years were less profitable as its earnings per share fell by 17.2% annually while its revenue was flat

3. Eroding returns on capital suggest its historical profit centers are aging

At $38.26 per share, Polaris trades at 25.5x forward P/E. Read our free research report to see why you should think twice about including PII in your portfolio, it’s free.