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Contango Oil & Gas Co (AMEX:MCF)
Gross Profit
$205.7 Mil (TTM As of Sep. 2014)

Contango Oil & Gas Co's gross profit for the three months ended in Sep. 2014 was $49.0 Mil. Contango Oil & Gas Co's gross profit for the trailing twelve months (TTM) ended in Sep. 2014 was $205.7 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Contango Oil & Gas Co's gross profit for the three months ended in Sep. 2014 was $49.0 Mil. Contango Oil & Gas Co's revenue for the three months ended in Sep. 2014 was $67.6 Mil. Therefore, Contango Oil & Gas Co's Gross Margin for the quarter that ended in Sep. 2014 was 79.58%.

Contango Oil & Gas Co had a gross margin of 79.58% for the quarter that ended in Sep. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Contango Oil & Gas Co was 89.50%. The lowest was -5493.42%. And the median was 72.85%.

Warning Sign:

Contango Oil & Gas Co gross margin has been in long term decline. The average rate of decline per year is -11.8%.


Definition

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

Contango Oil & Gas Co's Gross Profit for the fiscal year that ended in Jun. 2013 is calculated as

Gross Profit (A: Jun. 2013 )=Revenue - Cost of Goods Sold
=127.201 - 31.907
=95.3

Contango Oil & Gas Co's Gross Profit for the quarter that ended in Sep. 2014 is calculated as

Gross Profit (Q: Sep. 2014 )=Revenue - Cost of Goods Sold
=67.552 - 13.797
=53.8

Contango Oil & Gas Co Gross Profit for the trailing twelve months (TTM) ended in Sep. 2014 was 58.403 (Dec. 2013 ) + 42.273 (Mar. 2014 ) + 55.99 (Jun. 2014 ) + 49.042 (Sep. 2014 ) = $205.7 Mil.

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

Contango Oil & Gas Co's Gross Margin for the quarter that ended in Sep. 2014 is calculated as

Gross Margin (Q: Sep. 2014 )=Gross Profit (Q: Sep. 2014 ) / Revenue (Q: Sep. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=53.8 / 67.552
=79.58 %

* 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

Contango Oil & Gas Co had a gross margin of 79.58% for the quarter that ended in Sep. 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.

Contango Oil & Gas Co Annual Data

Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13
Gross_Profit -6.3-4.8-6.010.9103.4141.2142.3166.3153.743.5

Contango Oil & Gas Co Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Gross_Profit 33.1-21.723.321.920.029.158.442.356.049.0
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