A company that generates cash isn't automatically a winner. Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.

Cash flow is valuable, but it's not everything - StockStory helps you identify the companies that truly put it to work. Keeping that in mind, here are three cash-producing companies to steer clear of and a few better alternatives.

UiPath (PATH)

Trailing 12-Month Free Cash Flow Margin: 21.1%

Starting with robotic process automation (RPA) and evolving into a comprehensive automation powerhouse, UiPath (NYSE:PATH) provides an AI-powered business automation platform that enables organizations to create software robots that mimic human actions to streamline repetitive tasks and processes.

Why Does PATH Worry Us?

1. Underwhelming ARR growth of 11.7% over the last year suggests the company faced challenges in acquiring and retaining long-term customers

2. Estimated sales growth of 8.3% for the next 12 months implies demand will slow from its two-year trend

3. Competitive market means the company must spend more on sales and marketing to stand out even if the return on investment is low

At $16.80 per share, UiPath trades at 5x forward price-to-sales. Dive into our free research report to see why there are better opportunities than PATH .

CBRE (CBRE)

Trailing 12-Month Free Cash Flow Margin: 2.2%

Established in 1906, CBRE (NYSE:CBRE) is one of the largest commercial real estate services firms in the world.

Why Is CBRE Risky?

1. Scale is a double-edged sword because it limits the company's growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 11.8% for the last five years

2. Poor free cash flow margin of 2.5% for the last two years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends

3. Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results

CBRE's stock price of $148.67 implies a valuation ratio of 17.6x forward P/E. Check out our free in-depth research report to learn more about why CBRE doesn't pass our bar .

Illinois Tool Works (ITW)

Trailing 12-Month Free Cash Flow Margin: 17.7%

Founded by Byron Smith, an investor who held over 100 patents, Illinois Tool Works (NYSE:ITW) manufactures engineered components and specialized equipment for numerous industries.

Why Does ITW Give Us Pause?

1. Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy

2. Estimated sales growth of 4.1% for the next 12 months is soft and implies weaker demand

3. Earnings per share lagged its peers over the last two years as they only grew by 4% annually