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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

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

 May07 May08 May09 May10 May11 May12 May13 May14 May15 May16 Gross_Profit 119 299 205 195 185 202 215 303 396 648

Cal-Maine Foods Inc Quarterly Data

 Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Gross_Profit 81 93 113 109 263 212 133 41 -10 4
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