StockStory Flags Weak Returns and Cash Flow at Three Companies

StockStory highlighted American Airlines, Forestar Group and Performance Food Group for what it described as warning signs in their businesses. The publisher noted that discretionary stocks had fallen 1% over six months, while the S&P 500 had risen 16.3%.

For American Airlines, StockStory cited lagging performance in revenue passenger miles and shrinking returns on capital. The article said the shares were priced at 31.2 times forward earnings.

Forestar Group drew concern over cash burn and falling returns on capital, according to StockStory. The publisher also said the company’s lots sold had averaged -18.6% growth over the past two years. Its shares were valued at 9.5 times forward earnings.

Performance Food Group had stronger unit sales, averaging 6.9% growth over two years, the article said. But StockStory pointed to a 1.3% free cash flow margin over that period, which it said leaves little room to fund growth or return capital to shareholders.

The publisher also said Performance Food Group’s returns on capital were improving as management invested in more worthwhile ventures. The article put its forward price-to-earnings ratio at 16.3 times.