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Cal-Maine Foods Inc (NAS:CALM)
Gross Profit
$263 Mil (TTM As of Feb. 2014)

Cal-Maine Foods Inc's gross profit for the three months ended in Feb. 2014 was $92 Mil. Cal-Maine Foods Inc's gross profit for the trailing twelve months (TTM) ended in Feb. 2014 was $263 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 Feb. 2014 was $92 Mil. Cal-Maine Foods Inc's revenue for the three months ended in Feb. 2014 was $396 Mil. Therefore, Cal-Maine Foods Inc's Gross Margin for the quarter that ended in Feb. 2014 was 23.23%.

Cal-Maine Foods Inc had a gross margin of 23.23% for the quarter that ended in Feb. 2014 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Cal-Maine Foods Inc was 32.60%. The lowest was 9.44%. And the median was 19.15%.

Warning Sign:

Cal-Maine Foods Inc gross margin has been in long term decline. The average rate of decline per year is -10.9%.


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. 2013 is calculated as

Gross Profit (A: May. 2013 )=Revenue - Cost of Goods Sold
=1288.104 - 1073.555
=215

Cal-Maine Foods Inc's Gross Profit for the quarter that ended in Feb. 2014 is calculated as

Gross Profit (Q: Feb. 2014 )=Revenue - Cost of Goods Sold
=395.522 - 303.627
=92

Cal-Maine Foods Inc Gross Profit for the trailing twelve months (TTM) ended in Feb. 2014 was 51.489 (May. 2013 ) + 44.911 (Aug. 2013 ) + 74.667 (Nov. 2013 ) + 91.895 (Feb. 2014 ) = $263 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 Feb. 2014 is calculated as

Gross Margin (Q: Feb. 2014 )=Gross Profit (Q: Feb. 2014 ) / Revenue (Q: Feb. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=92 / 395.522
=23.23 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own 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 23.23% for the quarter that ended in Feb. 2014 => Competition eroding margins


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 own currency.

Cal-Maine Foods Inc Annual Data

May04May05May06May07May08May09May10May11May12May13
Gross_Profit 1763562119299205195185202215

Cal-Maine Foods Inc Quarterly Data

Nov11Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14
Gross_Profit 61654145516751457592
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