No. of Recommendations: 13
Doesn't most of its revenue come from heavily regulated businesses with capped profit margins?
Let’s say, as a thought experiment, that your margin is capped at 10%.
Let’s also say you are smart and have found a way to increase your sales dramatically, either by finding new customers, getting more business from current customers, or stealing customers from competitors. For the sake of math, pretend you can double sales over 5 years - with the same margins.
Should your company be worth in the stock market than it was before, the same, or less?
Yes, insurance margins are capped. Many railroad rates are set by regulation, that doesn’t stop UP and NS from combining to try to win increased volumes from truckers or other competitors (BNSF!), and we look at Geico and Progressive market share to see how they’re doing, no?
