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RR Donnelley & Sons Co (NAS:RRD)
Gross Profit
$2,557 Mil (TTM As of Mar. 2015)

RR Donnelley & Sons Co's gross profit for the three months ended in Mar. 2015 was $580 Mil. RR Donnelley & Sons Co's gross profit for the trailing twelve months (TTM) ended in Mar. 2015 was $2,557 Mil.

Gross Margin is calculated as gross profit divided by its revenue. RR Donnelley & Sons Co's gross profit for the three months ended in Mar. 2015 was $580 Mil. RR Donnelley & Sons Co's revenue for the three months ended in Mar. 2015 was $2,746 Mil. Therefore, RR Donnelley & Sons Co's Gross Margin for the quarter that ended in Mar. 2015 was 21.11%.

RR Donnelley & Sons Co had a gross margin of 21.11% for the quarter that ended in Mar. 2015 => Competition eroding margins

During the past 13 years, the highest Gross Margin of RR Donnelley & Sons Co was 29.58%. The lowest was 17.19%. And the median was 25.90%.

Warning Sign:

RR Donnelley & Sons Co gross margin has been in long term decline. The average rate of decline per year is -2.1%.


Definition

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

RR Donnelley & Sons Co's Gross Profit for the fiscal year that ended in Dec. 2014 is calculated as

Gross Profit (A: Dec. 2014 )=Revenue - Cost of Goods Sold
=11603.4 - 9052.8
=2,551

RR Donnelley & Sons Co's Gross Profit for the quarter that ended in Mar. 2015 is calculated as

Gross Profit (Q: Mar. 2015 )=Revenue - Cost of Goods Sold
=2746.1 - 2166.4
=580

RR Donnelley & Sons Co Gross Profit for the trailing twelve months (TTM) ended in Mar. 2015 was 662.2 (Jun. 2014 ) + 647.6 (Sep. 2014 ) + 667.6 (Dec. 2014 ) + 579.7 (Mar. 2015 ) = $2,557 Mil.

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

RR Donnelley & Sons Co's Gross Margin for the quarter that ended in Mar. 2015 is calculated as

Gross Margin (Q: Mar. 2015 )=Gross Profit (Q: Mar. 2015 ) / Revenue (Q: Mar. 2015 )
=(Revenue - Cost of Goods Sold) / Revenue
=580 / 2746.1
=21.11 %

* 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

RR Donnelley & Sons Co had a gross margin of 21.11% for the quarter that ended in Mar. 2015 => 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.

RR Donnelley & Sons Co Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Gross_Profit 2,3402,5183,0553,0052,3952,3762,5192,3332,3312,551

RR Donnelley & Sons Co Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
Gross_Profit 585558598570604573662648668580
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