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GuruFocus has detected 1 Warning Sign with Astec Industries Inc \$ASTE.
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Astec Industries Inc (NAS:ASTE)
Gross Profit
\$265 Mil (TTM As of Dec. 2016)

Astec Industries Inc's gross profit for the three months ended in Dec. 2016 was \$64 Mil. Astec Industries Inc's gross profit for the trailing twelve months (TTM) ended in Dec. 2016 was \$265 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Astec Industries Inc's gross profit for the three months ended in Dec. 2016 was \$64 Mil. Astec Industries Inc's revenue for the three months ended in Dec. 2016 was \$327 Mil. Therefore, Astec Industries Inc's Gross Margin for the quarter that ended in Dec. 2016 was 19.74%.

Astec Industries Inc had a gross margin of 19.74% for the quarter that ended in Dec. 2016 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Astec Industries Inc was 24.14%. The lowest was 20.65%. And the median was 22.69%.

Definition

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

Astec Industries 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 = 1147.431 - 882.162 = 265

Astec Industries 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 = 326.563 - 262.091 = 64

Astec Industries Inc Gross Profit for the trailing twelve months (TTM) ended in Dec. 2016 was 71.956 (Mar. 2016 ) + 73.452 (Jun. 2016 ) + 55.389 (Sep. 2016 ) + 64.472 (Dec. 2016 ) = \$265 Mil.

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

Astec Industries 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 = 64 / 326.563 = 19.74 %

* 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

Astec Industries Inc had a gross margin of 19.74% 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.

Astec Industries Inc Annual Data

 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Gross_Profit 210 233 152 175 212 208 207 215 219 265

Astec Industries Inc Quarterly Data

 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Gross_Profit 43 53 66 62 45 45 72 73 55 64
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