Of every euro of revenue – how much is left at the end as real profit? 20 % means €100 of revenue turns into €20 of profit.
Rule of thumb:
MoatLens tip: High, stable margins are often the clearest sign of a moat – a lasting competitive advantage that lets the company hold or raise its prices without losing customers. But margins depend heavily on the industry: in retail they're naturally thin, in software or luxury very high. So compare only within the industry – and watch the trend above all: rising margins over several years say more than a single high figure.
Margins show what share of revenue remains as profit — that is, how profitable the business is per unit sold.
Why does this matter?
High and stable margins are often a sign of "pricing power" — the company can raise prices without customers switching to competitors. Low margins usually mean: tough competition, where price is the main argument.
What counts as good?
MoatLens perspective: The search is for companies with "pricing power" — the ability to raise prices without losing customers. High, stable margins are often a hint of this.
What to watch for: Look at the trend over several years. Rising margins are a positive sign — they show the company is strengthening its competitive position, not weakening it.
In MoatLens this explanation sits right next to the number — one tap away. And you see the ten-year trend instead of a single value.
