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Contango Oil & Gas Co (AMEX:MCF)
Gross Profit
$127.3 Mil (TTM As of Jun. 2014)

Contango Oil & Gas Co's gross profit for the three months ended in Jun. 2014 was $56.0 Mil. Contango Oil & Gas Co's gross profit for the trailing twelve months (TTM) ended in Jun. 2014 was $127.3 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 Jun. 2014 was $56.0 Mil. Contango Oil & Gas Co's revenue for the three months ended in Jun. 2014 was $78.4 Mil. Therefore, Contango Oil & Gas Co's Gross Margin for the quarter that ended in Jun. 2014 was 85.24%.

Contango Oil & Gas Co had a gross margin of 85.24% for the quarter that ended in Jun. 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 74.04%.

Warning Sign:

Contango Oil & Gas Co gross margin has been in long term decline. The average rate of decline per year is -6.9%.


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 Dec. 2013 is calculated as

Gross Profit (A: Dec. 2013 )=Revenue - Cost of Goods Sold
=164.121 - 32.091
=132.0

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

Gross Profit (Q: Jun. 2014 )=Revenue - Cost of Goods Sold
=78.419 - 11.576
=66.8

Contango Oil & Gas Co Gross Profit for the trailing twelve months (TTM) ended in Jun. 2014 was 29.08 (Sep. 2013 ) + 0 (Dec. 2013 ) + 42.273 (Mar. 2014 ) + 55.99 (Jun. 2014 ) = $127.3 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 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
=66.8 / 78.419
=85.24 %

* 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 85.24% 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.

Contango Oil & Gas Co Annual Data

Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Dec13
Gross_Profit -4.8-6.010.9103.4141.2142.3166.3153.743.5130.2

Contango Oil & Gas Co Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Gross_Profit 35.533.1-21.723.321.920.029.10.042.356.0
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