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GuruFocus has detected 4 Warning Signs with AeroVironment Inc \$AVAV.
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AeroVironment Inc (NAS:AVAV)
Gross Profit
\$81.4 Mil (TTM As of Jan. 2017)

AeroVironment Inc's gross profit for the three months ended in Jan. 2017 was \$19.4 Mil. AeroVironment Inc's gross profit for the trailing twelve months (TTM) ended in Jan. 2017 was \$81.4 Mil.

Gross Margin is calculated as gross profit divided by its revenue. AeroVironment Inc's gross profit for the three months ended in Jan. 2017 was \$19.4 Mil. AeroVironment Inc's revenue for the three months ended in Jan. 2017 was \$53.2 Mil. Therefore, AeroVironment Inc's Gross Margin for the quarter that ended in Jan. 2017 was 36.40%.

AeroVironment Inc had a gross margin of 36.40% for the quarter that ended in Jan. 2017 => Competition eroding margins

During the past 13 years, the highest Gross Margin of AeroVironment Inc was 42.45%. The lowest was 35.77%. And the median was 39.12%.

Definition

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

AeroVironment Inc's Gross Profit for the fiscal year that ended in Apr. 2016 is calculated as

 Gross Profit (A: Apr. 2016 ) = Revenue - Cost of Goods Sold = 264.098 - 151.995 = 112.1

AeroVironment Inc's Gross Profit for the quarter that ended in Jan. 2017 is calculated as

 Gross Profit (Q: Jan. 2017 ) = Revenue - Cost of Goods Sold = 53.163 - 33.812 = 19.4

AeroVironment Inc Gross Profit for the trailing twelve months (TTM) ended in Jan. 2017 was 37.922 (Apr. 2016 ) + 6.683 (Jul. 2016 ) + 17.417 (Oct. 2016 ) + 19.351 (Jan. 2017 ) = \$81.4 Mil.

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

AeroVironment Inc's Gross Margin for the quarter that ended in Jan. 2017 is calculated as

 Gross Margin (Q: Jan. 2017 ) = Gross Profit (Q: Jan. 2017 ) / Revenue (Q: Jan. 2017 ) = (Revenue - Cost of Goods Sold) / Revenue = 19.4 / 53.163 = 36.40 %

* 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

AeroVironment Inc had a gross margin of 36.40% for the quarter that ended in Jan. 2017 => Competition eroding margins

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.

AeroVironment Inc Annual Data

 Apr07 Apr08 Apr09 Apr10 Apr11 Apr12 Apr13 Apr14 Apr15 Apr16 Gross_Profit 68.5 78.5 88.6 96.8 117.2 129.3 92.5 93.6 104.3 112.1

AeroVironment Inc Quarterly Data

 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Gross_Profit 17.9 27.0 45.4 16.0 31.5 26.6 37.9 6.7 17.4 19.4
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