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GuruFocus has detected 4 Warning Signs with Schweitzer-Mauduit International Inc $SWM.
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Schweitzer-Mauduit International Inc (NYSE:SWM)
Gross Profit
$256.7 Mil (TTM As of Dec. 2016)

Schweitzer-Mauduit International Inc's gross profit for the three months ended in Dec. 2016 was $63.2 Mil. Schweitzer-Mauduit International Inc's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was $256.7 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Schweitzer-Mauduit International Inc's gross profit for the three months ended in Dec. 2016 was $63.2 Mil. Schweitzer-Mauduit International Inc's revenue for the three months ended in Dec. 2016 was $198.7 Mil. Therefore, Schweitzer-Mauduit International Inc's Gross Margin for the quarter that ended in Dec. 2016 was 31.81%.

Schweitzer-Mauduit International Inc had a gross margin of 31.81% for the quarter that ended in Dec. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Schweitzer-Mauduit International Inc was 33.33%. The lowest was 13.44%. And the median was 28.46%.

Warning Sign:

Schweitzer-Mauduit International Inc gross margin has been in long term decline. The average rate of decline per year is -1.7%.


Definition

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

Schweitzer-Mauduit International Inc's Gross Profit for the fiscal year that ended in Dec. 2016 is calculated as

Gross Profit (A: Dec. 2016 )=Revenue - Cost of Goods Sold
=839.9 - 583.2
=256.7

Schweitzer-Mauduit International Inc's Gross Profit for the quarter that ended in Dec. 2016 is calculated as

Gross Profit (Q: Dec. 2016 )=Revenue - Cost of Goods Sold
=198.7 - 135.5
=63.2

Schweitzer-Mauduit International Inc Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 63.5 (Mar. 2016 ) + 66.9 (Jun. 2016 ) + 63.1 (Sep. 2016 ) + 63.2 (Dec. 2016 ) = $256.7 Mil.

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

Schweitzer-Mauduit International Inc's Gross Margin for the quarter that ended in Dec. 2016 is calculated as

Gross Margin (Q: Dec. 2016 )=Gross Profit (Q: Dec. 2016 ) / Revenue (Q: Dec. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=63.2 / 198.7
=31.81 %

* 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

Schweitzer-Mauduit International Inc had a gross margin of 31.81% for the quarter that ended in Dec. 2016 => 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 local exchange's currency.

Schweitzer-Mauduit International Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Gross_Profit 108.1103.2187.8195.2243.0259.5252.7218.8224.4256.7

Schweitzer-Mauduit International Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
Gross_Profit 52.949.151.454.852.465.863.566.963.163.2
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