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Mercury Systems Inc (NAS:MRCY)
Gross Profit
$94.8 Mil (TTM As of Mar. 2014)

Mercury Systems Inc's gross profit for the three months ended in Mar. 2014 was $25.1 Mil. Mercury Systems Inc's gross profit for the trailing twelve months (TTM) ended in Mar. 2014 was $94.8 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Mercury Systems Inc's gross profit for the three months ended in Mar. 2014 was $25.1 Mil. Mercury Systems Inc's revenue for the three months ended in Mar. 2014 was $55.5 Mil. Therefore, Mercury Systems Inc's Gross Margin for the quarter that ended in Mar. 2014 was 45.27%.

Mercury Systems Inc had a gross margin of 45.27% for the quarter that ended in Mar. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Mercury Systems Inc was 75.84%. The lowest was 39.59%. And the median was 62.54%.

Warning Sign:

Mercury Systems Inc gross margin has been in long term decline. The average rate of decline per year is -5.3%.


Definition

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

Mercury Systems Inc'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
=208.791 - 126.123
=82.7

Mercury Systems Inc's Gross Profit for the quarter that ended in Mar. 2014 is calculated as

Gross Profit (Q: Mar. 2014 )=Revenue - Cost of Goods Sold
=55.5 - 30.373
=25.1

Mercury Systems Inc Gross Profit for the trailing twelve months (TTM) ended in Mar. 2014 was 22.132 (Jun. 2013 ) + 22.585 (Sep. 2013 ) + 24.938 (Dec. 2013 ) + 25.127 (Mar. 2014 ) = $94.8 Mil.

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

Mercury Systems Inc's Gross Margin for the quarter that ended in Mar. 2014 is calculated as

Gross Margin (Q: Mar. 2014 )=Gross Profit (Q: Mar. 2014 ) / Revenue (Q: Mar. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=25.1 / 55.5
=45.27 %

* 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

Mercury Systems Inc had a gross margin of 45.27% for the quarter that ended in Mar. 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.

Mercury Systems Inc Annual Data

Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13
Gross_Profit 125.0165.7137.1122.2109.9105.4112.5129.9136.282.7

Mercury Systems Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
Gross_Profit 40.935.130.320.417.622.622.122.624.925.1
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