3 Losing Stocks That Miss the Mark

Warning Signs for Unprofitable Companies

Operating at a loss is often a cause for concern. Many businesses in this position are grappling with intensifying competition and dwindling access to capital.

While not all loss-making companies are doomed, distinguishing those with real potential from those likely to struggle is crucial. Here, we highlight three unprofitable companies that fall short of our standards, along with some more promising alternatives.

J. M. Smucker (SJM)

Latest 12-Month GAAP Operating Margin: -7.7%

J.M. Smucker (NYSE:SJM) is widely recognized for its fruit preserves and spreads, but its product range also includes peanut butter, coffee, and pet food.

Reasons to Be Cautious About SJM:

• Sales volumes have remained stagnant for two years, forcing the company to depend on price hikes to drive revenue.
• Operating expenses have increased faster than revenue, with the operating margin dropping by 11.4 percentage points over the past year.
• A modest 0.8% return on capital signals management’s struggle to generate profitable growth, and declining returns suggest previous profit drivers are fading.

Currently, J. M. Smucker trades at $109.80 per share, equating to an 11x forward price-to-earnings ratio.

Sphere Entertainment (SPHR)

Latest 12-Month GAAP Operating Margin: -12.6%

Sphere Entertainment (NYSE:SPHR) is best known for its iconic Las Vegas Sphere venue, hosting live events and distributing content across multiple media channels.

Why We’re Wary of SPHR:

• Annual revenue growth of just 18.1% over the past five years suggests the company is losing market share.
• With a free cash flow margin of only 7.5% over the last two years, SPHR has limited capacity to invest or return capital to shareholders.
• Ongoing losses make it difficult for the company to secure favorable financing from lenders.

Sphere Entertainment is priced at $114.08 per share, with a forward EV-to-EBITDA multiple of 20.1x.

Lumen (LUMN)

Latest 12-Month GAAP Operating Margin: -6.5%

Lumen Technologies (NYSE:LUMN) operates an extensive fiber optic network, with around 350,000 route miles across North America and the Asia Pacific, offering communications, cloud, security, and IT services to both businesses and consumers.

Why LUMN May Underperform:

• Revenue has declined by 9.7% annually over the past five years, as customers have delayed purchases.
• Earnings per share have dropped by 15.8% per year in the same period, indicating shrinking profitability on each sale.
• The free cash flow margin has contracted by 10.5 percentage points over five years, pointing to increased capital consumption just to remain competitive.

Lumen’s share price stands at $6.64, reflecting a forward EV-to-EBITDA ratio of 7.3x.

Stocks with Stronger Potential

WHILE YOU’RE HERE: Discover the Top 9 Market-Beating Stocks. The most successful stocks consistently outperform the market, boasting impressive revenue growth, expanding free cash flow, and exceptional returns on capital. These companies have already earned the market’s recognition.

Our AI-driven analysis suggests these winners still have room to run. See which nine stocks made our list this week—completely free.

Past selections include well-known names like Nvidia, which soared 1,326% from June 2020 to June 2025, and lesser-known companies such as Kadant, which delivered a 351% five-year return.