Is Variation in the Operating Margin a Good Indice of the Company's Potential?

A variation in margin is a very good indicator of a company's relative position in the industry, but mostly susceptibility to competition. Companies that have strong competition have variation in the margin. You can usually tell if it's a volume base stuff that you'd see cyclically in the operating margin, or if it's gross a base stuff, which means that there's severe cost a volatility or price volatility.