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GuruFocus has detected 3 Warning Signs with Seagate Technology PLC \$STX.
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Seagate Technology PLC (NAS:STX)
Gross Profit
\$3,170 Mil (TTM As of Mar. 2017)

Seagate Technology PLC's gross profit for the three months ended in Mar. 2017 was \$816 Mil. Seagate Technology PLC's gross profit for the trailing twelve months (TTM) ended in Mar. 2017 was \$3,170 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Seagate Technology PLC's gross profit for the three months ended in Mar. 2017 was \$816 Mil. Seagate Technology PLC's revenue for the three months ended in Mar. 2017 was \$2,674 Mil. Therefore, Seagate Technology PLC's Gross Margin for the quarter that ended in Mar. 2017 was 30.52%.

Seagate Technology PLC had a gross margin of 30.52% for the quarter that ended in Mar. 2017 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Seagate Technology PLC was 31.35%. The lowest was 14.38%. And the median was 26.34%.

Definition

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

Seagate Technology PLC's Gross Profit for the fiscal year that ended in Jun. 2016 is calculated as

 Gross Profit (A: Jun. 2016 ) = Revenue - Cost of Goods Sold = 11160 - 8545 = 2,615

Seagate Technology PLC's Gross Profit for the quarter that ended in Mar. 2017 is calculated as

 Gross Profit (Q: Mar. 2017 ) = Revenue - Cost of Goods Sold = 2674 - 1858 = 816

Seagate Technology PLC Gross Profit for the trailing twelve months (TTM) ended in Mar. 2017 was 662 (Jun. 2016 ) + 801 (Sep. 2016 ) + 891 (Dec. 2016 ) + 816 (Mar. 2017 ) = \$3,170 Mil.

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

Seagate Technology PLC's Gross Margin for the quarter that ended in Mar. 2017 is calculated as

 Gross Margin (Q: Mar. 2017 ) = Gross Profit (Q: Mar. 2017 ) / Revenue (Q: Mar. 2017 ) = (Revenue - Cost of Goods Sold) / Revenue = 816 / 2674 = 30.52 %

* 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

Seagate Technology PLC had a gross margin of 30.52% for the quarter that ended in Mar. 2017 => Competition eroding margins

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.

Seagate Technology PLC Annual Data

 Jun07 Jun08 Jun09 Jun10 Jun11 Jun12 Jun13 Jun14 Jun15 Jun16 Gross_Profit 2,185 3,205 1,410 3,204 2,146 4,684 3,940 3,846 3,809 2,615

Seagate Technology PLC Quarterly Data

 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Gross_Profit 1,027 955 776 689 741 524 662 801 891 816
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