Value Investing How to think about low margins? |
| How to think about low margins? Posted: 02 Feb 2020 11:41 AM PST In the world of chasing high growth and high margins, low margin (esp. gross) businesses are frowned upon by most investors and operators. But is it really a dealbreaker on its own? For a growth not matured company/industry, is there any other metric or perspective we should consider in conjunction besides growth rate? Businesses with high competition and low entry barriers can surely lead to low margins, but is it necessarily true that a business becomes highly competitive and has low entry barriers because it has low margins? If margins are low (e.g. low gross margin to start with), how should the operator and the investor think about building moats and making it profitable and investable? [link] [comments]  |
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