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Newfield Exploration Company (NYSE:NFX)
Gross Profit
$1,452 Mil (TTM As of Dec. 2013)

Newfield Exploration Company's gross profit for the three months ended in Dec. 2013 was $369 Mil. Newfield Exploration Company's gross profit for the trailing twelve months (TTM) ended in Dec. 2013 was $1,452 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Newfield Exploration Company's gross profit for the three months ended in Dec. 2013 was $369 Mil. Newfield Exploration Company's revenue for the three months ended in Dec. 2013 was $498 Mil. Therefore, Newfield Exploration Company's Gross Margin for the quarter that ended in Dec. 2013 was 100.00%.

Newfield Exploration Company had a gross margin of 100.00% for the quarter that ended in Dec. 2013 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Newfield Exploration Company was 89.21%. The lowest was 67.95%. And the median was 84.22%.

Warning Sign:

Newfield Exploration Company gross margin has been in long term decline. The average rate of decline per year is -2.7%.


Definition

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

Newfield Exploration Company'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
=1789 - 0
=1,789

Newfield Exploration Company's Gross Profit for the quarter that ended in Dec. 2013 is calculated as

Gross Profit (Q: Dec. 2013 )=Revenue - Cost of Goods Sold
=498 - 0
=498

Newfield Exploration Company Gross Profit for the trailing twelve months (TTM) ended in Dec. 2013 was 413 (Mar. 2013 ) + 307 (Jun. 2013 ) + 363 (Sep. 2013 ) + 369 (Dec. 2013 ) = $1,452 Mil.

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

Newfield Exploration Company's Gross Margin for the quarter that ended in Dec. 2013 is calculated as

Gross Margin (Q: Dec. 2013 )=Gross Profit (Q: Dec. 2013 ) / Revenue (Q: Dec. 2013 )
=(Revenue - Cost of Goods Sold) / Revenue
=498 / 498
=100.00 %

* 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

Newfield Exploration Company had a gross margin of 100.00% for the quarter that ended in Dec. 2013 => 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.

Newfield Exploration Company Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 1,2071,5571,3961,4691,8031,0161,4311,6881,0031,309

Newfield Exploration Company Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Gross_Profit 418472468232254237413307363369
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