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AGCO Corp (NYSE:AGCO)
Gross Profit
$1,493 Mil (TTM As of Sep. 2016)

AGCO Corp's gross profit for the three months ended in Sep. 2016 was $354 Mil. AGCO Corp's gross profit for the trailing twelve months (TTM) ended in Sep. 2016 was $1,493 Mil.

Gross Margin is calculated as gross profit divided by its revenue. AGCO Corp's gross profit for the three months ended in Sep. 2016 was $354 Mil. AGCO Corp's revenue for the three months ended in Sep. 2016 was $1,762 Mil. Therefore, AGCO Corp's Gross Margin for the quarter that ended in Sep. 2016 was 20.07%.

AGCO Corp had a gross margin of 20.07% for the quarter that ended in Sep. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of AGCO Corp was 22.16%. The lowest was 16.45%. And the median was 19.25%.


Definition

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

AGCO Corp's Gross Profit for the fiscal year that ended in Dec. 2015 is calculated as

Gross Profit (A: Dec. 2015 )=Revenue - Cost of Goods Sold
=7467.3 - 5906.7
=1,561

AGCO Corp's Gross Profit for the quarter that ended in Sep. 2016 is calculated as

Gross Profit (Q: Sep. 2016 )=Revenue - Cost of Goods Sold
=1761.6 - 1408.1
=354

AGCO Corp Gross Profit for the trailing twelve months (TTM) ended in Sep. 2016 was 397.4 (Dec. 2015 ) + 314.7 (Mar. 2016 ) + 427 (Jun. 2016 ) + 353.5 (Sep. 2016 ) = $1,493 Mil.

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

AGCO Corp's Gross Margin for the quarter that ended in Sep. 2016 is calculated as

Gross Margin (Q: Sep. 2016 )=Gross Profit (Q: Sep. 2016 ) / Revenue (Q: Sep. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=354 / 1761.6
=20.07 %

* 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

AGCO Corp had a gross margin of 20.07% for the quarter that ended in Sep. 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.

AGCO Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Gross_Profit 9281,1911,5001,0721,2591,7762,1232,3912,0661,561

AGCO Corp Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
Gross_Profit 632422498348450366397315427354
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