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GuruFocus has detected 6 Warning Signs with Conagra Brands Inc \$CAG.
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Conagra Brands Inc (NYSE:CAG)
Gross Profit
\$2,933 Mil (TTM As of Nov. 2016)

Conagra Brands Inc's gross profit for the three months ended in Nov. 2016 was \$648 Mil. Conagra Brands Inc's gross profit for the trailing twelve months (TTM) ended in Nov. 2016 was \$2,933 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Conagra Brands Inc's gross profit for the three months ended in Nov. 2016 was \$648 Mil. Conagra Brands Inc's revenue for the three months ended in Nov. 2016 was \$2,088 Mil. Therefore, Conagra Brands Inc's Gross Margin for the quarter that ended in Nov. 2016 was 31.00%.

Conagra Brands Inc had a gross margin of 31.00% for the quarter that ended in Nov. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Conagra Brands Inc was 27.91%. The lowest was 21.00%. And the median was 24.41%.

Definition

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

Conagra Brands Inc's Gross Profit for the fiscal year that ended in May. 2016 is calculated as

 Gross Profit (A: May. 2016 ) = Revenue - Cost of Goods Sold = 11642.9 - 8552.1 = 3,091

Conagra Brands Inc's Gross Profit for the quarter that ended in Nov. 2016 is calculated as

 Gross Profit (Q: Nov. 2016 ) = Revenue - Cost of Goods Sold = 2088.4 - 1440.9 = 648

Conagra Brands Inc Gross Profit for the trailing twelve months (TTM) ended in Nov. 2016 was 800.4 (Feb. 2016 ) + 760.9 (May. 2016 ) + 724.1 (Aug. 2016 ) + 647.5 (Nov. 2016 ) = \$2,933 Mil.

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

Conagra Brands Inc's Gross Margin for the quarter that ended in Nov. 2016 is calculated as

 Gross Margin (Q: Nov. 2016 ) = Gross Profit (Q: Nov. 2016 ) / Revenue (Q: Nov. 2016 ) = (Revenue - Cost of Goods Sold) / Revenue = 648 / 2088.4 = 31.00 %

* 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

Conagra Brands Inc had a gross margin of 31.00% for the quarter that ended in Nov. 2016 => 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.

Conagra Brands Inc Annual Data

 May07 May08 May09 May10 May11 May12 May13 May14 May15 May16 Gross_Profit 2,693 2,714 2,782 3,061 2,903 2,799 3,365 2,927 2,876 3,091

Conagra Brands Inc Quarterly Data

 Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Gross_Profit 591 889 720 807 701 668 800 761 724 648
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