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GuruFocus has detected 6 Warning Signs with Brady Corp \$BRC.
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Gross Profit
\$561 Mil (TTM As of Jan. 2017)

Brady Corp's gross profit for the three months ended in Jan. 2017 was \$134 Mil. Brady Corp's gross profit for the trailing twelve months (TTM) ended in Jan. 2017 was \$561 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Brady Corp's gross profit for the three months ended in Jan. 2017 was \$134 Mil. Brady Corp's revenue for the three months ended in Jan. 2017 was \$268 Mil. Therefore, Brady Corp's Gross Margin for the quarter that ended in Jan. 2017 was 50.06%.

Brady Corp had a gross margin of 50.06% for the quarter that ended in Jan. 2017 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Brady Corp was 55.50%. The lowest was 47.66%. And the median was 49.63%.

Warning Sign:

Brady Corp gross margin has been in long term decline. The average rate of decline per year is -2.9%.

Definition

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

Brady Corp's Gross Profit for the fiscal year that ended in Jul. 2016 is calculated as

 Gross Profit (A: Jul. 2016 ) = Revenue - Cost of Goods Sold = 1120.625 - 561.852 = 559

Brady Corp's Gross Profit for the quarter that ended in Jan. 2017 is calculated as

 Gross Profit (Q: Jan. 2017 ) = Revenue - Cost of Goods Sold = 268.001 - 133.843 = 134

Brady Corp Gross Profit for the trailing twelve months (TTM) ended in Jan. 2017 was 145.443 (Apr. 2016 ) + 141.089 (Jul. 2016 ) + 140.358 (Oct. 2016 ) + 134.158 (Jan. 2017 ) = \$561 Mil.

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

Brady Corp's Gross Margin for the quarter that ended in Jan. 2017 is calculated as

 Gross Margin (Q: Jan. 2017 ) = Gross Profit (Q: Jan. 2017 ) / Revenue (Q: Jan. 2017 ) = (Revenue - Cost of Goods Sold) / Revenue = 134 / 268.001 = 50.06 %

* 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

Brady Corp had a gross margin of 50.06% for the quarter that ended in Jan. 2017 => Durable competitive advantage

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.

Brady Corp Annual Data

 Jul07 Jul08 Jul09 Jul10 Jul11 Jul12 Jul13 Jul14 Jul15 Jul16 Gross_Profit 657 744 578 623 588 591 609 610 558 559

Brady Corp Quarterly Data

 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Gross_Profit 150 138 141 129 139 133 145 141 140 134
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