The low valuation multiples for value stocks provide a margin of safety that growth stocks rarely offer. However, the challenge lies in determining whether these cheap assets are genuinely undervalued or simply on sale due to their potentially deteriorating business models.

Identifying genuine bargains from value traps is something many investors struggle with, which is why we started StockStory - to help you find the best companies. That said, here are three value stocks climbing an uphill battle and some other investments you should look into instead.

Expedia (EXPE)

Forward EV/EBITDA Ratio: 7.8x

Originally founded as a part of Microsoft, Expedia (NASDAQ: EXPE) is one of the world’s leading online travel agencies.

Why Are We Hesitant About EXPE?

1. Customer spending has dipped by 1.5% on average as it focused on growing its bookings
2. Estimated sales growth of 5.4% for the next 12 months implies demand will slow from its three-year trend
3. High marketing expenses suggest it needs to spend heavily on new customer acquisition to sustain momentum

Expedia is trading at $196 per share, or 7.8x forward EV/EBITDA. To fully understand why you should be careful with EXPE, check out our full research report (it’s free).

Edgewell Personal Care (EPC)

Forward P/E Ratio: 6.9x

Boasting brands such as Banana Boat, Schick, and Skintimate, Edgewell Personal Care (NYSE: EPC) sells personal care products in the skin and sun care, shave, and feminine care categories.

Why Do We Avoid EPC?

1. Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
2. Sales over the last three years were less profitable as its earnings per share fell by 2.6% annually while its revenue was flat
3. Free cash flow margin dropped by 4.9 percentage points over the last year, implying the company became more capital intensive as competition picked up

At $22.03 per share, Edgewell Personal Care trades at 6.9x forward P/E. Read our free research report to see why you should think twice about including EPC in your portfolio.

Fulton Financial (FULT)

Forward P/B Ratio: 1x

Tracing its roots back to 1882 in the heart of Pennsylvania, Fulton Financial (NASDAQ: FULT) is a financial holding company that provides banking, lending, and wealth management services to consumers and businesses across five Mid-Atlantic states.

Why Does FULT Give Us Pause?

1. Estimated net interest income growth of 1.9% for the next 12 months implies demand will slow from its five-year trend
2. Projected 2.8 percentage point efficiency ratio increase over the next year signals its day-to-day expenses will rise
3. Capital trends were unexciting over the last five years as its 4.3% annual tangible book value per share growth was below the typical bank company

Fulton Financial’s stock price of $17.79 implies a valuation ratio of 1x forward P/B. Check out our free in-depth research report to learn more about why FULT doesn’t pass our bar.

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