Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages. Just because a business is in the green today doesn’t mean it will thrive tomorrow.

Profits are valuable, but they’re not everything. At StockStory, we help you identify the companies that have real staying power. That said, here is one profitable company that balances growth and profitability and two that may struggle to keep up.

Trailing 12-Month GAAP Operating Margin: 4.8%

Built on its proprietary Message Video Phone (MVP) platform that unifies multiple communication methods, RingCentral (NYSE:RNG) provides AI-driven cloud communications and collaboration solutions that enable businesses to connect through voice, video, messaging, and contact center services.

Why Do We Pass on RNG?

Offerings struggled to generate meaningful interest as its average billings growth of 3.8% over the last year did not impress

Estimated sales growth of 4.5% for the next 12 months implies demand will slow from its two-year trend

Customer acquisition costs take a while to recoup, making it difficult to justify sales and marketing investments that could increase revenue

RingCentral’s stock price of $37.62 implies a valuation ratio of 1.3x forward price-to-sales. To fully understand why you should be careful with RNG, check out our full research report (it’s free).

Trailing 12-Month GAAP Operating Margin: 5.2%

Started on a kitchen table in Utah, Nature’s Sunshine (NASDAQ:NATR) manufactures and sells nutritional and personal care products.

Why Is NATR Not Exciting?

4.4% annual revenue growth over the last three years was slower than its consumer staples peers

Modest revenue base of $480.1 million gives it less fixed cost leverage and fewer distribution channels than larger companies

Subpar operating margin of 4.8% constrains its ability to invest in process improvements or effectively respond to new competitive threats

Nature's Sunshine is trading at $24.44 per share, or 23.4x forward P/E. Read our free research report to see why you should think twice about including NATR in your portfolio, it’s free.

Trailing 12-Month GAAP Operating Margin: 32.8%

Formerly known as The Priceline Group, Booking Holdings (NASDAQ:BKNG) is the world’s largest online travel agency.

Why Are We Positive On BKNG?

Prominent and differentiated platform leads to a best-in-class gross margin of 86.7%

Share repurchases over the last three years enabled its annual earnings per share growth of 31.4% to outpace its revenue gains

BKNG is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders

At $4,368 per share, Booking trades at 12.5x forward EV/EBITDA. Is now the right time to buy? Find out in our full research report, it’s free.

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