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GuruFocus has detected 2 Warning Signs with Andersons Inc \$ANDE.
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Andersons Inc (NAS:ANDE)
Gross Profit
\$346 Mil (TTM As of Dec. 2016)

Andersons Inc's gross profit for the three months ended in Dec. 2016 was \$104 Mil. Andersons Inc's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was \$346 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Andersons Inc's gross profit for the three months ended in Dec. 2016 was \$104 Mil. Andersons Inc's revenue for the three months ended in Dec. 2016 was \$1,113 Mil. Therefore, Andersons Inc's Gross Margin for the quarter that ended in Dec. 2016 was 9.32%.

Andersons Inc had a gross margin of 9.32% for the quarter that ended in Dec. 2016 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Andersons Inc was 10.08%. The lowest was 6.52%. And the median was 8.38%.

Definition

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

Andersons 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 = 3924.79 - 3579.284 = 346

Andersons 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 = 1113.055 - 1009.361 = 104

Andersons Inc Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 67.755 (Mar. 2016 ) + 97.042 (Jun. 2016 ) + 77.015 (Sep. 2016 ) + 103.694 (Dec. 2016 ) = \$346 Mil.

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

Andersons 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 = 104 / 1113.055 = 9.32 %

* 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

Andersons Inc had a gross margin of 9.32% for the quarter that ended in Dec. 2016 => No sustainable competitive advantage

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.

Andersons Inc Annual Data

 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Gross_Profit 240 258 256 282 353 358 365 397 376 346

Andersons Inc Quarterly Data

 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Gross_Profit 85 114 83 108 85 99 68 97 77 104
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