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GuruFocus has detected 2 Warning Signs with KEYW Holding Corp \$KEYW.
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KEYW Holding Corp (NAS:KEYW)
Gross Profit
\$91.3 Mil (TTM As of Dec. 2016)

KEYW Holding Corp's gross profit for the three months ended in Dec. 2016 was \$20.7 Mil. KEYW Holding Corp's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was \$91.3 Mil.

Gross Margin is calculated as gross profit divided by its revenue. KEYW Holding Corp's gross profit for the three months ended in Dec. 2016 was \$20.7 Mil. KEYW Holding Corp's revenue for the three months ended in Dec. 2016 was \$68.9 Mil. Therefore, KEYW Holding Corp's Gross Margin for the quarter that ended in Dec. 2016 was 30.08%.

KEYW Holding Corp had a gross margin of 30.08% for the quarter that ended in Dec. 2016 => Competition eroding margins

During the past 8 years, the highest Gross Margin of KEYW Holding Corp was 34.41%. The lowest was 28.48%. And the median was 30.52%.

Definition

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

KEYW Holding Corp'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 = 288.027 - 196.772 = 91.3

KEYW Holding Corp's Gross Profit for the quarter that ended in Dec. 2016 is calculated as

 Gross Profit (Q: Dec. 2016 ) = Revenue - Cost of Goods Sold = 68.928 - 48.196 = 20.7

KEYW Holding Corp Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 22.845 (Mar. 2016 ) + 23.879 (Jun. 2016 ) + 23.799 (Sep. 2016 ) + 20.732 (Dec. 2016 ) = \$91.3 Mil.

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

KEYW Holding Corp'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 = 20.7 / 68.928 = 30.08 %

* 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

KEYW Holding Corp had a gross margin of 30.08% 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.

KEYW Holding Corp Annual Data

 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Gross_Profit 0.0 0.0 11.1 31.5 56.6 83.8 99.5 86.3 89.7 91.3

KEYW Holding Corp Quarterly Data

 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Gross_Profit 26.5 14.5 20.2 24.3 23.8 21.4 22.8 23.9 23.8 20.7
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