Three Unprofitable Stocks to Avoid: Zillow, Masimo, and Xerox

Three unprofitable companies to avoid are Zillow (ZG), Masimo (MASI), and Xerox (XRX). These businesses face mounting challenges with declining sales, poor expense management, and eroding returns on capital. Zillow's annual sales have declined by 7.8% over the past five years, while Masimo and Xerox have seen sales tumble by 18.4% and 4.9% respectively. These companies have high valuations, with Zillow trading at 43.3x forward P/E and Masimo at 30.5x.

Investors and financial professionals should be cautious when considering Zillow (ZG), Masimo (MASI), and Xerox (XRX). These companies face significant challenges, including declining sales, poor expense management, and eroding returns on capital. This article provides an overview of the financial struggles of these firms and why they should be avoided.

Zillow (ZG)

Zillow, a leading U.S. online real estate marketplace, has experienced annual sales declines of 7.8% over the past five years. This trend indicates that the company's products and services have struggled to resonate with the market [1]. Additionally, poor expense management has led to operating margin losses, further eroding the company's financial health. Zillow's stock price of $81.70 implies a valuation ratio of 43.3x forward P/E, suggesting that the market may be overvaluing the company's prospects [1].

Masimo (MASI)

Masimo, a developer and manufacturer of noninvasive patient monitoring technologies, has seen sales tumble by 18.4% annually over the last two years. This decline indicates that market trends are working against the company's favor. Masimo's trailing 12-month GAAP operating margin is -12.8%, reflecting significant financial struggles [1]. The company's valuation is also high, trading at 30.5x forward P/E, which may not be justified by its current financial performance [1].

Xerox (XRX)

Xerox, a global technology company, has faced a 4.9% annual sales decline over the past five years. This trend highlights the company's challenges in maintaining market share and revenue growth. Xerox's trailing 12-month GAAP operating margin is -6.1%, indicating poor expense management and financial performance [1]. The company's valuation is also high, with a forward P/E ratio of 20.9x, which may not be sustainable given its current financial struggles [1].

Conclusion

Investors should approach these companies with caution due to their financial challenges. Zillow, Masimo, and Xerox face mounting issues with declining sales, poor expense management, and eroding returns on capital. Their high valuations further suggest that the market may be overestimating their prospects. Before investing in these companies, it is essential to conduct thorough research and consider alternative investment opportunities.

References

[1] https://finance.yahoo.com/news/3-unprofitable-stocks-fall-short-044028713.html