Companies that burn cash at a rapid pace can run into serious trouble if they fail to secure funding. Without a clear path to profitability, these businesses risk dilution, mounting debt, or even bankruptcy.

Not all companies are worth the risk, and that’s why we built StockStory - to help you spot the red flags. That said, here are three cash-burning companies that don’t make the cut and some better opportunities instead.

1-800-FLOWERS (FLWS)

Trailing 12-Month Free Cash Flow Margin: -2.9%

Founded in 1976, 1-800-FLOWERS $(FLWS)$ is an online retailer of flowers, gifts, and gourmet foods, serving customers globally.

Why Should You Sell FLWS?

1. Products and services aren't resonating with the market as its revenue declined by 9.9% annually over the last two years
2. Earnings per share fell by 18.4% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

1-800-FLOWERS’s stock price of $5.50 implies a valuation ratio of 18.3x forward P/E. Dive into our free research report to see why there are better opportunities than FLWS.

Great Lakes Dredge & Dock (GLDD)

Trailing 12-Month Free Cash Flow Margin: -1.4%

Founded as Lydon & Drews dredging company, Great Lakes Dredge & Dock $(GLDD)$ provides dredging services, land reclamation, and coastal protection projects in the United States and internationally.

Why Are We Hesitant About GLDD?

1. Annual revenue growth of 2.9% over the last five years was below our standards for the industrials sector
2. Projected sales decline of 1.3% for the next 12 months points to a tough demand environment ahead
3. Cash-burning tendencies make us wonder if it can sustainably generate shareholder value

Great Lakes Dredge & Dock is trading at $11.88 per share, or 15x forward P/E. Check out our free in-depth research report to learn more about why GLDD doesn’t pass our bar.

EchoStar (SATS)

Trailing 12-Month Free Cash Flow Margin: -4.5%

Following its 2023 acquisition of DISH Network, EchoStar $(SATS)$ provides satellite communications, pay-TV services, wireless networks, and broadband solutions across consumer and enterprise markets.

Why Is SATS Risky?

1. Incremental sales over the last five years were much less profitable as its earnings per share fell by 8.1% annually while its revenue grew
2. Free cash flow margin dropped by 10.8 percentage points over the last five years, implying the company became more capital intensive as competition picked up
3. Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders

At $30 per share, EchoStar trades at 6.2x forward EV-to-EBITDA. If you’re considering SATS for your portfolio, see our FREE research report to learn more.

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