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GuruFocus has detected 2 Warning Signs with Mitcham Industries Inc \$MIND.
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Mitcham Industries Inc (NAS:MIND)
Gross Profit
\$-7.41 Mil (TTM As of Jan. 2017)

Mitcham Industries Inc's gross profit for the three months ended in Jan. 2017 was \$-2.67 Mil. Mitcham Industries Inc's gross profit for the trailing twelve months (TTM) ended in Jan. 2017 was \$-7.41 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Mitcham Industries Inc's gross profit for the three months ended in Jan. 2017 was \$-2.67 Mil. Mitcham Industries Inc's revenue for the three months ended in Jan. 2017 was \$12.55 Mil. Therefore, Mitcham Industries Inc's Gross Margin for the quarter that ended in Jan. 2017 was -21.27%.

Mitcham Industries Inc had a gross margin of -21.27% for the quarter that ended in Jan. 2017 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Mitcham Industries Inc was 51.18%. The lowest was -18.08%. And the median was 35.25%.

Definition

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

Mitcham Industries Inc's Gross Profit for the fiscal year that ended in Jan. 2017 is calculated as

 Gross Profit (A: Jan. 2017 ) = Revenue - Cost of Goods Sold = 40.999 - 48.413 = -7.41

Mitcham Industries Inc's Gross Profit for the quarter that ended in Jan. 2017 is calculated as

 Gross Profit (Q: Jan. 2017 ) = Revenue - Cost of Goods Sold = 12.548 - 15.217 = -2.67

Mitcham Industries Inc Gross Profit for the trailing twelve months (TTM) ended in Jan. 2017 was -0.366 (Apr. 2016 ) + -2.242 (Jul. 2016 ) + -2.137 (Oct. 2016 ) + -2.669 (Jan. 2017 ) = \$-7.41 Mil.

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

Mitcham Industries Inc's Gross Margin for the quarter that ended in Jan. 2017 is calculated as

 Gross Margin (Q: Jan. 2017 ) = Gross Profit (Q: Jan. 2017 ) / Revenue (Q: Jan. 2017 ) = (Revenue - Cost of Goods Sold) / Revenue = -2.67 / 12.548 = -21.27 %

* 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

Mitcham Industries Inc had a gross margin of -21.27% for the quarter that ended in Jan. 2017 => No sustainable competitive advantage

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.

Mitcham Industries Inc Annual Data

 Jan08 Jan09 Jan10 Jan11 Jan12 Jan13 Jan14 Jan15 Jan16 Jan17 Gross_Profit 35.81 32.64 18.13 26.64 57.75 37.41 32.02 23.25 2.67 -7.41

Mitcham Industries Inc Quarterly Data

 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Gross_Profit 7.01 1.77 4.58 -2.61 1.72 -1.02 -0.37 -2.24 -2.14 -2.67
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