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Check Point Software Technologies Ltd (NAS:CHKP)
Gross Profit
$1,270 Mil (TTM As of Jun. 2014)

Check Point Software Technologies Ltd's gross profit for the three months ended in Jun. 2014 was $322 Mil. Check Point Software Technologies Ltd's gross profit for the trailing twelve months (TTM) ended in Jun. 2014 was $1,270 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Check Point Software Technologies Ltd's gross profit for the three months ended in Jun. 2014 was $322 Mil. Check Point Software Technologies Ltd's revenue for the three months ended in Jun. 2014 was $363 Mil. Therefore, Check Point Software Technologies Ltd's Gross Margin for the quarter that ended in Jun. 2014 was 88.69%.

Check Point Software Technologies Ltd had a gross margin of 88.69% for the quarter that ended in Jun. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Check Point Software Technologies Ltd was 95.63%. The lowest was 85.06%. And the median was 92.53%.


Definition

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

Check Point Software Technologies Ltd's Gross Profit for the fiscal year that ended in Dec. 2013 is calculated as

Gross Profit (A: Dec. 2013 )=Revenue - Cost of Goods Sold
=1394.105 - 162.634
=1,231

Check Point Software Technologies Ltd's Gross Profit for the quarter that ended in Jun. 2014 is calculated as

Gross Profit (Q: Jun. 2014 )=Revenue - Cost of Goods Sold
=362.598 - 41.011
=322

Check Point Software Technologies Ltd Gross Profit for the trailing twelve months (TTM) ended in Jun. 2014 was 303.998 (Sep. 2013 ) + 340.88 (Dec. 2013 ) + 303.328 (Mar. 2014 ) + 321.587 (Jun. 2014 ) = $1,270 Mil.

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

Check Point Software Technologies Ltd's Gross Margin for the quarter that ended in Jun. 2014 is calculated as

Gross Margin (Q: Jun. 2014 )=Gross Profit (Q: Jun. 2014 ) / Revenue (Q: Jun. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=322 / 362.598
=88.69 %

* 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

Check Point Software Technologies Ltd had a gross margin of 88.69% for the quarter that ended in Jun. 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.

Check Point Software Technologies Ltd Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 4885495396497167919341,0711,1841,231

Check Point Software Technologies Ltd Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Gross_Profit 275291294324286301304341303322
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