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GuruFocus has detected 2 Warning Signs with Vulcan Materials Co $VMC.
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Vulcan Materials Co (NYSE:VMC)
Gross Profit
$1,001 Mil (TTM As of Dec. 2016)

Vulcan Materials Co's gross profit for the three months ended in Dec. 2016 was $240 Mil. Vulcan Materials Co's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was $1,001 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Vulcan Materials Co's gross profit for the three months ended in Dec. 2016 was $240 Mil. Vulcan Materials Co's revenue for the three months ended in Dec. 2016 was $873 Mil. Therefore, Vulcan Materials Co's Gross Margin for the quarter that ended in Dec. 2016 was 27.46%.

Vulcan Materials Co had a gross margin of 27.46% for the quarter that ended in Dec. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Vulcan Materials Co was 28.57%. The lowest was 11.07%. And the median was 18.10%.


Definition

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

Vulcan Materials Co'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
=3592.667 - 2591.85
=1,001

Vulcan Materials Co's Gross Profit for the quarter that ended in Dec. 2016 is calculated as

Gross Profit (Q: Dec. 2016 )=Revenue - Cost of Goods Sold
=872.974 - 633.269
=240

Vulcan Materials Co Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 164.718 (Mar. 2016 ) + 292.184 (Jun. 2016 ) + 304.209 (Sep. 2016 ) + 239.705 (Dec. 2016 ) = $1,001 Mil.

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

Vulcan Materials Co'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
=240 / 872.974
=27.46 %

* 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

Vulcan Materials Co had a gross margin of 27.46% 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.

Vulcan Materials Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Gross_Profit 9517504463012843344275888581,001

Vulcan Materials Co Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
Gross_Profit 20917078234291254165292304240
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