Hi,
Look up Dupont formula for calculating ROE. That will help you understand the components of ROE. Margin is just one component of 3.
Margin is what most investors are immediately draw to. But a company may have low margins but great asset turnover and thus still be making good ROEs.
Eventually, in the long run, a company creates value for equity investors when its ROE is consistently greater than its cost of equity.
Of course a great company need not be a great investment. To make sure a great company turns I to a great investment, you also have to buy it cheap or at least at fair price. If you want to get an idea on how to calculate / estimate fair price from first principles, look up Discounted Cash flow analysis and go deep into it.
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