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M D C Holdings Inc (NYSE:MDC)
Gross Profit
$289 Mil (TTM As of Sep. 2015)

M D C Holdings Inc's gross profit for the three months ended in Sep. 2015 was $82 Mil. M D C Holdings Inc's gross profit for the trailing twelve months (TTM) ended in Sep. 2015 was $289 Mil.

Gross Margin is calculated as gross profit divided by its revenue. M D C Holdings Inc's gross profit for the three months ended in Sep. 2015 was $82 Mil. M D C Holdings Inc's revenue for the three months ended in Sep. 2015 was $468 Mil. Therefore, M D C Holdings Inc's Gross Margin for the quarter that ended in Sep. 2015 was 17.48%.

M D C Holdings Inc had a gross margin of 17.48% for the quarter that ended in Sep. 2015 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of M D C Holdings Inc was 29.73%. The lowest was 13.05%. And the median was 17.39%.

Warning Sign:

M D C Holdings Inc gross margin has been in long term decline. The average rate of decline per year is -4%.


Definition

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

M D C Holdings Inc's Gross Profit for the fiscal year that ended in Dec. 2015 is calculated as

Gross Profit (A: Dec. 2015 )=Revenue - Cost of Goods Sold
=1860.226 - 1562
=298

M D C Holdings Inc's Gross Profit for the quarter that ended in Sep. 2015 is calculated as

Gross Profit (Q: Sep. 2015 )=Revenue - Cost of Goods Sold
=468.487 - 386.582
=82

M D C Holdings Inc Gross Profit for the trailing twelve months (TTM) ended in Sep. 2015 was 65.008 (Dec. 2014 ) + 57.802 (Mar. 2015 ) + 83.902 (Jun. 2015 ) + 81.905 (Sep. 2015 ) = $289 Mil.

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

M D C Holdings Inc's Gross Margin for the quarter that ended in Sep. 2015 is calculated as

Gross Margin (Q: Sep. 2015 )=Gross Profit (Q: Sep. 2015 ) / Revenue (Q: Sep. 2015 )
=(Revenue - Cost of Goods Sold) / Revenue
=82 / 468.487
=17.48 %

* 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

M D C Holdings Inc had a gross margin of 17.48% for the quarter that ended in Sep. 2015 => 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 own currency.

M D C Holdings Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Gross_Profit 1,149446219186155107177289281298

M D C Holdings Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
Gross_Profit 86595980736558848289
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