Switch to:
Applied Materials, Inc. (NAS:AMAT)
Gross Profit
$3,300 Mil (TTM As of Jan. 2014)

Applied Materials, Inc.'s gross profit for the three months ended in Jan. 2014 was $891 Mil. Applied Materials, Inc.'s gross profit for the trailing twelve months (TTM) ended in Jan. 2014 was $3,300 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Applied Materials, Inc.'s gross profit for the three months ended in Jan. 2014 was $891 Mil. Applied Materials, Inc.'s revenue for the three months ended in Jan. 2014 was $2,190 Mil. Therefore, Applied Materials, Inc.'s Gross Margin for the quarter that ended in Jan. 2014 was 40.68%.

Applied Materials, Inc. had a gross margin of 40.68% for the quarter that ended in Jan. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Applied Materials, Inc. was 53.34%. The lowest was 28.54%. And the median was 44.29%.


Definition

Gross Profit is the different between the sale prices and the cost of buying or producing the goods.

Applied Materials, Inc.'s Gross Profit for the fiscal year that ended in Oct. 2013 is calculated as

Gross Profit (A: Oct. 2013 )=Revenue - Cost of Goods Sold
=7509 - 4518
=2,991

Applied Materials, Inc.'s Gross Profit for the quarter that ended in Jan. 2014 is calculated as

Gross Profit (Q: Jan. 2014 )=Revenue - Cost of Goods Sold
=2190 - 1299
=891

Applied Materials, Inc. Gross Profit for the trailing twelve months (TTM) ended in Jan. 2014 was 808 (Apr. 2013 ) + 806 (Jul. 2013 ) + 795 (Oct. 2013 ) + 891 (Jan. 2014 ) = $3,300 Mil.

Gross Profit is the numerator in the calculation of Gross Margin:

Applied Materials, Inc.'s Gross Margin for the quarter that ended in Jan. 2014 is calculated as

Gross Margin (Q: Jan. 2014 )=Gross Profit (Q: Jan. 2014 ) / Revenue (Q: Jan. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=891 / 2190
=40.68 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

Applied Materials, Inc. had a gross margin of 40.68% for the quarter that ended in Jan. 2014 => Durable competitive advantage


Related Terms

Cost of Goods Sold, Gross Margin, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Applied Materials, Inc. Annual Data

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
Gross_Profit 3,7013,0864,2924,4923,4431,4313,7154,3603,3132,991

Applied Materials, Inc. Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
Gross_Profit 8517861,011930587582808806795891
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Hide