High profit margin attracts competitions!
How long will economic moats last?
Brand
Commodity industry, low cost strategies work
Locking in customer by creating high switching cost
locking out competitors
Red flags
Declining cash flow: cash from operations decline but net income keeps upward
Serial acquirers
The CFO or auditors leave: accounting issue?
Valuation
PB is most useful for financial firms and firms with numerous tangible assets, and least useful for service-oriented firms.
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