Nasdaq
華爾街日報1 Cash-Producing Stock Worth Your Attention and 2 We Brush Off
While strong cash flow is a key indicator of stability, it doesn’t always translate to superior returns. Some cash-heavy businesses struggle with inefficient spending, slowing demand, or weak competitive positioning.
Luckily for you, we built StockStory to help you separate the good from the bad. That said, here is one cash-producing company that reinvests wisely to drive long-term success and two that may struggle to keep up.
Two Stocks to Sell:
WD-40 (WDFC)
Trailing 12-Month Free Cash Flow Margin: 13.5%
Short for “Water Displacement perfected on the 40th try”, WD-40 (NASDAQ:WDFC) is a renowned American consumer goods company known for its iconic and versatile spray, WD-40 Multi-Use Product.
Why Does WDFC Fall Short?
- Muted 6.1% annual revenue growth over the last three years shows its demand lagged behind its consumer staples peers
- Revenue base of $620 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
- Estimated sales growth of 4.1% for the next 12 months implies demand will slow from its three-year trend
WD-40’s stock price of $202.71 implies a valuation ratio of 33.9x forward P/E. Dive into our free research report to see why there are better opportunities than WDFC.
Crane (CR)
Trailing 12-Month Free Cash Flow Margin: 14.7%
Based in Connecticut, Crane (NYSE:CR) is a diversified manufacturer of engineered industrial products, including fluid handling, and aerospace technologies.
Why Do We Think Twice About CR?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 5.2% annually over the last five years
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Annual earnings per share growth of 2.4% underperformed its revenue over the last two years, partly because it diluted shareholders
At $186.98 per share, Crane trades at 29.7x forward P/E. To fully understand why you should be careful with CR, check out our full research report (it’s free for active Edge members).
One Stock to Watch:
ResMed (RMD)
Trailing 12-Month Free Cash Flow Margin: 33.6%
Founded in 1989 to address the then-underdiagnosed condition of sleep apnea, ResMed (NYSE:RMD) develops cloud-connected medical devices and software solutions that treat sleep apnea, COPD, and other respiratory disorders for home and clinical use.
Why Does RMD Stand Out?
- Steady constant currency growth over the past two years shows the company can pursue its global ambitions, even in uncertain economic times
- Additional sales over the last five years increased its profitability as the 14.2% annual growth in its earnings per share outpaced its revenue
- Free cash flow margin expanded by 21.4 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
ResMed is trading at $244.93 per share, or 21.6x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
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