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Understanding company income statements: What is a good profit margin that would make it worthwhile to invest?
The short answer is that it depends on the industry. In other words, margin alone - even in comparison to peers - will not be a sufficient index to track company success.  I'll mention Apple quickly as a special case that has managed to charge a premium margin for a mass-market product.  Few companies can achieve this. As with all investment analysis, you need to have a very clear understanding of the industry (i.e. what is "normal" for debt/equity/gearing/margin/cash-on-hand) as well as of the barriers-to-entry which competitors face. A higher-than-normal margin may swiftly be undermined by competitors (Apple aside).  Any company offering perpetual above-the-odds returns may just be a Ponzi scheme (Bernie Maddof, etc.).  More important than high-margins or high-profits over some short-term track is consistency of approach, an ability to whether adverse cyclical events, and deep investment in continuity (i.e. the entire company doesn't come to a grinding halt when a crucial staff-member retires).