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GuruFocus has detected 4 Warning Signs with Cal-Maine Foods Inc $CALM.
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Cal-Maine Foods Inc (NAS:CALM)
Gross Profit
$168 Mil (TTM As of Nov. 2016)

Cal-Maine Foods Inc's gross profit for the three months ended in Nov. 2016 was $4 Mil. Cal-Maine Foods Inc's gross profit for the trailing twelve months (TTM) ended in Nov. 2016 was $168 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Cal-Maine Foods Inc's gross profit for the three months ended in Nov. 2016 was $4 Mil. Cal-Maine Foods Inc's revenue for the three months ended in Nov. 2016 was $254 Mil. Therefore, Cal-Maine Foods Inc's Gross Margin for the quarter that ended in Nov. 2016 was 1.56%.

Cal-Maine Foods Inc had a gross margin of 1.56% for the quarter that ended in Nov. 2016 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Cal-Maine Foods Inc was 33.95%. The lowest was 13.46%. And the median was 21.20%.


Definition

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

Cal-Maine Foods 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
=1908.65 - 1260.576
=648

Cal-Maine Foods 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
=253.544 - 249.596
=4

Cal-Maine Foods Inc Gross Profit for the trailing twelve months (TTM) ended in Nov. 2016 was 132.726 (Feb. 2016 ) + 40.68 (May. 2016 ) + -9.569 (Aug. 2016 ) + 3.948 (Nov. 2016 ) = $168 Mil.

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

Cal-Maine Foods 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
=4 / 253.544
=1.56 %

* 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

Cal-Maine Foods Inc had a gross margin of 1.56% for the quarter that ended in Nov. 2016 => No sustainable competitive advantage


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.

Cal-Maine Foods Inc Annual Data

May07May08May09May10May11May12May13May14May15May16
Gross_Profit 119299205195185202215303396648

Cal-Maine Foods Inc Quarterly Data

Aug14Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16
Gross_Profit 819311310926321213341-104
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