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GuruFocus has detected 2 Warning Signs with JXTG Holdings Inc $JXHLY.
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JXTG Holdings Inc (OTCPK:JXHLY)
Gross Profit
$7,019 Mil (TTM As of Dec. 2016)

JXTG Holdings Inc's gross profit for the three months ended in Dec. 2016 was $2,367 Mil. JXTG Holdings Inc's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was $7,019 Mil.

Gross Margin is calculated as gross profit divided by its revenue. JXTG Holdings Inc's gross profit for the three months ended in Dec. 2016 was $2,367 Mil. JXTG Holdings Inc's revenue for the three months ended in Dec. 2016 was $18,170 Mil. Therefore, JXTG Holdings Inc's Gross Margin for the quarter that ended in Dec. 2016 was 13.03%.

JXTG Holdings Inc had a gross margin of 13.03% for the quarter that ended in Dec. 2016 => No sustainable competitive advantage

During the past 8 years, the highest Gross Margin of JXTG Holdings Inc was 9.84%. The lowest was 2.35%. And the median was 6.59%.

Warning Sign:

JXTG Holdings Inc gross margin has been in long term decline. The average rate of decline per year is -12.6%.


Definition

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

JXTG Holdings Inc's Gross Profit for the fiscal year that ended in Mar. 2016 is calculated as

Gross Profit (A: Mar. 2016 )=Revenue - Cost of Goods Sold
=77372.5889188 - 72810.1321418
=4,562

JXTG Holdings 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
=18169.7372629 - 15802.8450466
=2,367

JXTG Holdings Inc Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 1488.12069596 (Mar. 2016 ) + 1580.73637719 (Jun. 2016 ) + 1582.75883412 (Sep. 2016 ) + 2366.89221634 (Dec. 2016 ) = $7,019 Mil.

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

JXTG Holdings 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
=2,367 / 18169.7372629
=13.03 %

* 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

JXTG Holdings Inc had a gross margin of 13.03% for the quarter that ended in Dec. 2016 => No sustainable 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 local exchange's currency.

JXTG Holdings Inc Annual Data

Mar09Mar10Mar11Mar12Mar13Mar14Mar15Mar16
Gross_Profit 009772,47510,15110,2388,3167,5672,9034,562

JXTG Holdings Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
Gross_Profit 1,383-6321,1631,7931169171,4881,5811,5832,367
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