A company can increase its profits by selling more and more every year. So, you need to look at a company’s Net Sales, and check if it is growing consistently at a healthy rate. Sales can grow with a higher volume or higher price, preferably both.
Growth in volume should keep pace with the growth in demand for the category; e.g. if demand for paint is growing at 6%, then that is the minimum growth rate required to maintain market share.
Secondly, prices should reflect the effect of inflation. Only when the total cost increase is passed on to consumers will a company maintain its profitability. So, if that paint company encounters an inflation rate of 4%, then its net sales must grow at a minimum rate of (6+4)%, i.e. 10%, to maintain a healthy growth rate. When a company’s sales grow year after year profitably, this indicates that it has a sustainable moat.