DDR's NPAT margin might be skinnier than SNL's and GUD's but absolute level of NPAT margin is not as important as is the consistency of that margin.
Yes, I get all that. I'm not critical of the margin itself. It forms part of their business model which has been very successful and constant across many years. My point is more around those tight but consistent margins being tested given that the consistency has been supported, historically, by their low level of external debt and benign interest rates.
The change in conditions (debt level and interest rates) may test that consistency although I have listened to the founder speak often enough to be sure that they have a carefully formulated, disciplined approach to, first, selecting agencies and then, following through with efficient performance.
I agree with your comments around "margin analysis". I quite admire their lean, mean Balance Sheet supported by their quarterly full distribution of their profit but they've gradually allowed external debt to more than double their Equity.
If they ever felt the need to reduce that debt, which, I suspect, is moving closer to the edge of bank acceptability, they have no way of achieving that other than reducing the dividend or raising capital given that they really don't have any assets to sell.
I don't have an issue with this other than to feel that a P/E of, say, 18 is a bit too high which is how this conversation started.
(I've actually owned shares here for some time and indicated my "Position" incorrectly with my last contribution).
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