Nasdaq
华尔街日报1 Cash-Producing Stock with Promising Prospects and 2 Facing Headwinds
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 face some trouble.
Two Industrials Stocks to Sell:
Fastenal (FAST)
Trailing 12-Month Free Cash Flow Margin: 12.1%
Founded in 1967, Fastenal (NASDAQ:FAST) provides industrial and construction supplies, including fasteners, tools, safety products, and many other product categories to businesses globally.
Why Are We Cautious About FAST?
- 4.8% annual revenue growth over the last two years was slower than its industrials peers
- Annual earnings per share growth of 3.7% underperformed its revenue over the last two years, showing its incremental sales were less profitable
- 1.2 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
At $41.53 per share, Fastenal trades at 35.5x forward P/E. Dive into our free research report to see why there are better opportunities than FAST.
C.H. Robinson Worldwide (CHRW)
Trailing 12-Month Free Cash Flow Margin: 4.9%
Engaging in contracts with tens of thousands of transportation companies, C.H. Robinson (NASDAQ:CHRW) offers freight transportation and logistics services.
Why Does CHRW Give Us Pause?
- Customers postponed purchases of its products and services this cycle as its revenue declined by 5.4% annually over the last two years
- High input costs result in an inferior gross margin of 7.4% that must be offset through higher volumes
- Waning returns on capital imply its previous profit engines are losing steam
C.H. Robinson Worldwide’s stock price of $160.92 implies a valuation ratio of 29.1x forward P/E. Read our free research report to see why you should think twice about including CHRW in your portfolio.
One Industrials Stock to Watch:
KBR (KBR)
Trailing 12-Month Free Cash Flow Margin: 6.2%
Known for projects like the construction of Guantanamo Bay, KBR provides professional services and technologies, specializing in engineering, construction, and government services sectors.
Why Are We Fans of KBR?
- Operating profits and efficiency rose over the last five years as it benefited from some fixed cost leverage
- Share buybacks catapulted its annual earnings per share growth to 17.9%, which outperformed its revenue gains over the last five years
- Improving returns on capital reflect management’s ability to monetize investments
KBR is trading at $40.25 per share, or 10.2x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free for active Edge members.
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