Using systems theory, i think margin is a buffer for profitability that (to your point) allows for shock absorbing (as all buffers do.) Higher margins are also a risk of losing market share to a price-competitor, and you can suggest that market share is also a buffer for consumer engagement -- the ability of a firm to successfully raise prices (in the short term) is proportional to its market share.
Does the buffer of market share outweigh the buffer of margin?
Interestingly, the "what companies are valued on" is an increasingly surprising thing when you think about how real estate development works. Properties are valued on a multiple of their Net Operating Income, which creates a scenario where capital improvements that have low ROI in terms of NOI are actually high ROI when you include the effect on equity (future sale price.) In the current environment of 4% cap rates (NOI / Sale price) each additional dollar of income increases the value of the property by $26 (one dollar for the income and 25 dollars for the sale price bump.) This is why every landlord is very incentivized to borrow as much as possible to improve property as much as possible to raise rents as high as the market will reliably bear (vacancy kills your NOI and scares off acquirers) and then sell the property.
Does the buffer of market share outweigh the buffer of margin?
Interestingly, the "what companies are valued on" is an increasingly surprising thing when you think about how real estate development works. Properties are valued on a multiple of their Net Operating Income, which creates a scenario where capital improvements that have low ROI in terms of NOI are actually high ROI when you include the effect on equity (future sale price.) In the current environment of 4% cap rates (NOI / Sale price) each additional dollar of income increases the value of the property by $26 (one dollar for the income and 25 dollars for the sale price bump.) This is why every landlord is very incentivized to borrow as much as possible to improve property as much as possible to raise rents as high as the market will reliably bear (vacancy kills your NOI and scares off acquirers) and then sell the property.