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GuruFocus has detected 3 Warning Signs with B/E Aerospace Inc \$BEAV.
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B/E Aerospace Inc (NAS:BEAV)
Gross Profit
\$1,133 Mil (TTM As of Dec. 2016)

B/E Aerospace Inc's gross profit for the three months ended in Dec. 2016 was \$273 Mil. B/E Aerospace Inc's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was \$1,133 Mil.

Gross Margin is calculated as gross profit divided by its revenue. B/E Aerospace Inc's gross profit for the three months ended in Dec. 2016 was \$273 Mil. B/E Aerospace Inc's revenue for the three months ended in Dec. 2016 was \$730 Mil. Therefore, B/E Aerospace Inc's Gross Margin for the quarter that ended in Dec. 2016 was 37.35%.

B/E Aerospace Inc had a gross margin of 37.35% for the quarter that ended in Dec. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of B/E Aerospace Inc was 41.82%. The lowest was 33.98%. And the median was 38.05%.

Definition

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

B/E Aerospace Inc's Gross Profit for the fiscal year that ended in Dec. 2016 is calculated as

 Gross Profit (A: Dec. 2016 ) = Revenue - Cost of Goods Sold = 2932.9 - 1799.5 = 1,133

B/E Aerospace Inc's Gross Profit for the quarter that ended in Dec. 2016 is calculated as

 Gross Profit (Q: Dec. 2016 ) = Revenue - Cost of Goods Sold = 730.4 - 457.6 = 273

B/E Aerospace Inc Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 280.1 (Mar. 2016 ) + 305.3 (Jun. 2016 ) + 275.2 (Sep. 2016 ) + 272.8 (Dec. 2016 ) = \$1,133 Mil.

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

B/E Aerospace Inc's Gross Margin for the quarter that ended in Dec. 2016 is calculated as

 Gross Margin (Q: Dec. 2016 ) = Gross Profit (Q: Dec. 2016 ) / Revenue (Q: Dec. 2016 ) = (Revenue - Cost of Goods Sold) / Revenue = 273 / 730.4 = 37.35 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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

B/E Aerospace Inc had a gross margin of 37.35% for the quarter that ended in Dec. 2016 => Competition eroding margins

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

B/E Aerospace Inc Annual Data

 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Gross_Profit 570 724 669 721 936 801 907 1,016 1,087 1,133

B/E Aerospace Inc Quarterly Data

 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Gross_Profit 230 249 288 281 255 263 280 305 275 273
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