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Pep Boys - Manny Moe & Jack (NYSE:PBY)
Gross Profit
$480 Mil (TTM As of Oct. 2014)

Pep Boys - Manny Moe & Jack's gross profit for the three months ended in Oct. 2014 was $118 Mil. Pep Boys - Manny Moe & Jack's gross profit for the trailing twelve months (TTM) ended in Oct. 2014 was $480 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Pep Boys - Manny Moe & Jack's gross profit for the three months ended in Oct. 2014 was $118 Mil. Pep Boys - Manny Moe & Jack's revenue for the three months ended in Oct. 2014 was $518 Mil. Therefore, Pep Boys - Manny Moe & Jack's Gross Margin for the quarter that ended in Oct. 2014 was 22.86%.

Pep Boys - Manny Moe & Jack had a gross margin of 22.86% for the quarter that ended in Oct. 2014 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Pep Boys - Manny Moe & Jack was 32.99%. The lowest was 21.99%. And the median was 26.57%.

Warning Sign:

Pep Boys - Manny Moe & Jack gross margin has been in long term decline. The average rate of decline per year is -1.2%.


Definition

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

Pep Boys - Manny Moe & Jack's Gross Profit for the fiscal year that ended in Jan. 2014 is calculated as

Gross Profit (A: Jan. 2014 )=Revenue - Cost of Goods Sold
=2066.568 - 1579.191
=487

Pep Boys - Manny Moe & Jack's Gross Profit for the quarter that ended in Oct. 2014 is calculated as

Gross Profit (Q: Oct. 2014 )=Revenue - Cost of Goods Sold
=517.584 - 399.25
=118

Pep Boys - Manny Moe & Jack Gross Profit for the trailing twelve months (TTM) ended in Oct. 2014 was 104.016 (Jan. 2014 ) + 133.126 (Apr. 2014 ) + 124.297 (Jul. 2014 ) + 118.334 (Oct. 2014 ) = $480 Mil.

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

Pep Boys - Manny Moe & Jack's Gross Margin for the quarter that ended in Oct. 2014 is calculated as

Gross Margin (Q: Oct. 2014 )=Gross Profit (Q: Oct. 2014 ) / Revenue (Q: Oct. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=118 / 517.584
=22.86 %

* 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

Pep Boys - Manny Moe & Jack had a gross margin of 22.86% for the quarter that ended in Oct. 2014 => Competition eroding margins


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.

Pep Boys - Manny Moe & Jack Annual Data

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
Gross_Profit 611502566486465486522510492487

Pep Boys - Manny Moe & Jack Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
Gross_Profit 131116117122139123104133124118
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