Switch to:
Chesapeake Energy Corp (NYSE:CHK)
Gross Profit
$1,942 Mil (TTM As of Mar. 2016)

Chesapeake Energy Corp's gross profit for the three months ended in Mar. 2016 was $305 Mil. Chesapeake Energy Corp's gross profit for the trailing twelve months (TTM) ended in Mar. 2016 was $1,942 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Chesapeake Energy Corp's gross profit for the three months ended in Mar. 2016 was $305 Mil. Chesapeake Energy Corp's revenue for the three months ended in Mar. 2016 was $1,953 Mil. Therefore, Chesapeake Energy Corp's Gross Margin for the quarter that ended in Mar. 2016 was 15.62%.

Chesapeake Energy Corp had a gross margin of 15.62% for the quarter that ended in Mar. 2016 => No sustainable competitive advantage

During the past 13 years, the highest Gross Margin of Chesapeake Energy Corp was 84.87%. The lowest was 18.57%. And the median was 46.88%.

Warning Sign:

Chesapeake Energy Corp gross margin has been in long term decline. The average rate of decline per year is -15.9%.


Definition

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

Chesapeake Energy Corp's Gross Profit for the fiscal year that ended in Dec. 2015 is calculated as

Gross Profit (A: Dec. 2015 )=Revenue - Cost of Goods Sold
=12764 - 10394
=2,370

Chesapeake Energy Corp's Gross Profit for the quarter that ended in Mar. 2016 is calculated as

Gross Profit (Q: Mar. 2016 )=Revenue - Cost of Goods Sold
=1953 - 1648
=305

Chesapeake Energy Corp Gross Profit for the trailing twelve months (TTM) ended in Mar. 2016 was 627 (Jun. 2015 ) + 662 (Sep. 2015 ) + 348 (Dec. 2015 ) + 305 (Mar. 2016 ) = $1,942 Mil.

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

Chesapeake Energy Corp's Gross Margin for the quarter that ended in Mar. 2016 is calculated as

Gross Margin (Q: Mar. 2016 )=Gross Profit (Q: Mar. 2016 ) / Revenue (Q: Mar. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=305 / 1953
=15.62 %

* 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

Chesapeake Energy Corp had a gross margin of 15.62% for the quarter that ended in Mar. 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 own currency.

Chesapeake Energy Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Gross_Profit 5,2465,0977,0926,5374,7565,0015,0475,9216,8442,370

Chesapeake Energy Corp Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
Gross_Profit 1,3301,5081,4201,9741,942733627662348305
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK