A company keeping 30 cents of every dollar has pricing power — customers accept its price and rivals cannot easily undercut it. A company keeping 2 cents is fighting for its life on every sale. Margins that hold steady for years are one of the more honest signs of a durable business.
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Consistently high margins usually indicate…
Accounting tricks
Pricing power and a defensible position correct
Low sales
In a genuinely competitive market, margins get bid down. Persistently high ones mean something is protecting them.
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